LendingClub Cutting 225 Jobs as ‘Historic’ Rate Hikes Throttle Demand

LendingClub is cutting 225 jobs as demand for loans falls due to rising interest rates.

The cuts — which amount to 14% of the digital marketplace bank’s workforce — come as a result of the “historic pace” of rate hikes made by the Federal Reserve, LendingClub said in a Thursday (Jan. 12) press release.

“We remain committed to championing the financial success of our customers while generating long-term profitable growth amid an increasingly challenging economic environment,” LendingClub CEO Scott Sanborn said in the release. “We have proactively implemented various measures to make this happen, including the very difficult decision to reorganize and reduce our workforce.”

This news comes about two months after shares of AI lending platform Upstart plunged more than 20% after the company said rising interest rates and a slowing economy saw its tally of new loans cut in half.

Upstart Co-founder and CEO Dave Girouard said at the time that higher interest rates and risk in the economy had translated into a 40% reduction in the number of loan applicants compared to a year earlier.

The news of the job cuts also comes a day after Wells Fargo announced that it is shrinking and simplifying its home lending business in order to reduce its risk in the mortgage industry.

Similarly, a week earlier, it was reported that Wall Street and banks are growing concerned about car buyers’ debt load because the size of outstanding auto loans puts both borrowers and lenders at risk.

PYMNTS research has found that even consumers who are not living paycheck to paycheck are cutting back on big-ticket purchases for the home — a sign of growing uncertainty among those with disposable incomes and good credit scores.

All households — not just those living paycheck to paycheck and struggling — have spent less on household furnishings, consumer electronics and appliances over the last month, according to “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration.

The workforce reduction at LendingClub will result in savings of $25 million to $30 million this year, according to the press release.

“These measures enable us to more closely align our expense structure to loan volume and revenue, while ensuring effective execution against our strategic priorities and long-term vision,” Sanborn said in the release.