Rocket mortgages as interest rates rise and refinancing dries up

Rocket Mortgage CEO Bob Walters (Getty)

The Federal Reserve’s anti-inflation measures are hurting Rocket Mortgage’s core business.

Rocket Companies subsidiary struggling to find foothold in rising interest rate environment, Wall Street Journal reportRising mortgage rates have dampened demand for mortgage products, including mortgage bread and butter. America’s largest mortgagerefinancing.

More than 19 million Americans will benefit from refinancing in the second half of 2020, according to Black Knight. Homeowners he is down to 133,000. exceeded 7%82% of Rocket’s loan volume last year came from refinancing, according to Inside Mortgage Finance.

Refinancing decreased by 86% YoY change for the week ending Oct. 21, according to the Mortgage Bankers Association.

The company is trying to counter this decline by focusing on features like selling mortgages and encouraging customers to withdraw cash from properties.

While cashing out helps homeowners unlock the value of their homes for immediate needs, it often increases lifetime interest costs by reinstating homeowners’ mortgages.

According to Black Knight, 96% of refis were used for cash withdrawals in August, up from 54% a year ago. A spokesperson for the company told the outlet that the average cash-out customer receives $45,000 and cuts his monthly payment by $100.

The company’s lending volume this year is fast approaching less than half of what it was a year ago. In the first half of 2022, Rocket Companies’ revenue fell by two-thirds of his. The company may post its first loss after going public in his 2020, reporting third-quarter earnings this week.

Bankers say they are facing widespread burnout and declining fee checks as the company seeks to gain better traction in the current interest rate environment. Rocket is offering an acquisition package to some employees and has so far avoided enacting layoffs. Other Mortgages, Proptech, Housing Companies.

— Holden Walter Warner

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