Rocket Companies Quarterly Revenue, Profits Fall Again After 2020 Boom
Dan Gilbert’s Rocket Companies saw their revenues and profits in the mortgage industry fall in the third quarter compared to boom periods last year, although they are still very profitable and continue to grow their market share. leading.
Rocket reported net income of nearly $ 1.4 billion on $ 3.1 billion in revenue from July to September, down from about $ 3 billion in net income and $ 4.6 billion in income over the same period in 2020, during a nationwide increase in mortgage refinancing.
Even though refinancing activity is down from last year’s highs, Rocket managed to create almost the same volume of mortgages in the last quarter ($ 88 billion) as in the third quarter of 2020 (88 billion). , $ 9 billion).
Rocket reached that milestone by increasing its purchase mortgage business by 70% year-over-year for the quarter, the company said.
Rocket is now poised to expand its market share at the top of the mortgage industry to 9.5% by the end of the year, from around 8% for 2020.
Rocket CEO Jay Farner told Wall Street analysts on an earnings call Thursday night that he plans to further increase the company’s market share in 2022, even as mortgage activity in its whole should contract.
“We plan to exceed 10% market share,” said Farner. “We have consistently increased our market share, regardless of the size of the pie.”
Rocket’s closely watched “gain on sale” margin, a measure of each loan’s profitability, was 3.05% in the quarter, up from 2.78% in the second quarter, although well below the average margin. extraordinarily high rate of 4.48% in 2020.
The mortgage industry as a whole posted record profits in 2020 amid a mortgage refinancing boom, but lenders are now entering a bear cycle as interest rates rise from historic lows.
Rocket does not publicly disclose the share of its refinancing business relative to home purchase loans, although refis have always been the strength of the company.
Rocket Companies is a group of several Gilbert companies, the largest of which is Rocket Mortgage, formerly called Quicken Loans.
Rocket Auto, which launched in August with its online vehicle marketplace RocketAuto.com, generated more than $ 530 million in gross merchandise value in the third quarter. That figure would equate to $ 2 billion on an annualized basis, which theoretically would make Rocket Auto one of the top 10 used car dealers nationwide, Farner said.
Rocket Auto calculates the gross value of goods as the selling price of vehicles sold, plus sales of vehicle-related products.
Rocket’s stock closed 24 cents higher at $ 17.86.