Rocket Companies, Inc. (NYSE:RKT) – Rising Mortgage Rates May Impact Lenders Less Than You Think: Rocket Companies CEO Talks Market Strength

Soaring mortgage rates put pressure on mortgage lenders. Rocket Companies Inc. (NYSE: RKT), the largest mortgage originator in the United States, has seen its stock plunge more than 30% since the start of the year, but that may not accurately reflect the strength of the business.

“Yes, we’re off record from a market perspective, but we’re still looking at $2 trillion to $2.5 trillion in mortgages this year,” the Rocket Companies CEO said. Jay Farner said Wednesday on CNBC’s “The Exchange.”

What there is to know: As capacity rolls out of the mortgage market, Farner is confident there will be opportunities ahead for lenders who continue to focus on the business and provide excellent customer service.

Farner noted that verified approval letters were up 50% in January from a year ago, and the company received the most pre-approvals to start a year. He also mentioned that the fourth quarter represented the strongest period ever for cash refinancing.

“We have about 2.6 million customers that we serve on a monthly basis, so that’s great business volume for us, throwing up monthly cash flow,” Farner said.

There is currently about $25 trillion in equity locked up in people’s homes, so lenders can also help customers use their capital, he added.

“Although a little on the rise, [mortgages] are still very competitive compared to other ways to borrow money,” said Farner. “If customers are planning to make improvements or pay off debt or do other things, a mortgage still makes a lot of sense right now.

From last week: Housing Beat: Mortgage rates continue to climb; Disney Affordable Housing Project

In the company’s most recent earnings report, Rocket provided a closed loan volume forecast for the first quarter of $52 billion to $57 billion. Sales margins are expected to gain 2.8% to 3.1%, according to data from BenzingaPro.

“If you’re thinking of selling, this summer will be the perfect time to do so,” Farner said. “In January, we had more Verified Approval customers in our pipeline than ever before. That tells me that customers want to be considered cash buyers, and they’re going to be very active this spring.”

RKT Price Action: Rocket Companies traded between $9.42 and $23.30 over a 52-week period.

The stock was up 0.79% at $9.63 at press time.

Photo: Erik Drost from Flickr.

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