Rocket Companies Inc., one of the nation’s largest mortgage lenders, reported a 277% increase in
The company posted adjusted revenue that beat estimates. And with a ten-fold increase in net income last year to $9.4 billion, Rocket declared a special dividend of $1.11 per share, according to a statement on Thursday. Shares surged as much as 7.8% to $21.46 in late trading.
“We successfully drove growth in every segment of our business,” Rocket Chief Executive Officer Jay Farner said in the statement.
The pandemic real estate boom gave a major boost to the mortgage industry, which posted record loan volume and profits in 2020 as rates dipped to historic lows. Much of that was thanks to the Federal Reserve, which kept a lid on borrowing costs and bought mortgage bonds as part of its bid to stimulate the economy.
But profitability may have peaked. Rocket reported a 4.41% profit margin on newly originated loans last quarter, well above the company’s November estimate of 3.8% to 4.1%. It told investors on Thursday to expect margins on new loans this quarter to be around 3.6% to 3.9%.
Mortgage lenders have been warning investors in recent weeks that profitability won’t expand this year. UWM Holdings Corp., the parent company of United Wholesale Mortgage, said profits on new loans this quarter could
Mr. Cooper Group Inc., meanwhile, said this week that its gains on mortgage sales -- lenders generally sell the loans they originate -- will be roughly flat this quarter.
Mortgage rates in the U.S.
That could deter more Americans from seeking to refinance debt, while surging home prices are pushing ownership out of reach for many.
