Falling home prices will boost the sales market, Rocket CFO said

The expected decrease in mortgage activity will further strengthen the business environment, but home buyers will enjoy the collateral damage in the form of lower housing prices, said a leader. the Rocket Company.

Sky-high home values ​​in the US will fall by 5% this year, according to a December study by Fitch Ratings. Meanwhile, industry estimates suggest the annual amount between $1.7 trillion and $1.9 trillion, less than half of the $4 trillion peak reached in 2021. The fall, although painful, can install a strong sales market for first-time buyers.

“Our overall view is that a slight drop in rates is good for the mortgage space,” said Brian Brown, chief financial officer at Rocket Companies, in a Fitch webinar on Wednesday. We have to look carefully and think about debt and everything I know you are thinking about. But a 5% down payment can really benefit first-time home buyers.”

Rising home prices and mortgage rates, which have risen more than 7% in the past few months, have spurred ten-year low application activity, increased healingand a number of with sales. The market, however, has shown some recent signs of life, including an increase in demand to start the year.

First millennial consumer could jump to falling home prices, Brown suggested. Today’s customers compare well to those whose loans caused the Great Financial Crisis, and experts often cite affordability as their main issue.

Rocket is ready to sell on the real estate pool for the first time collected from its Rocket Money application, which includes millions of members of the church There are no mortgages with the lender. The personal finance program that keeps users in-house is one reason Brown doesn’t expect Rocket to enter the busy M&A market.

“That could really be a game changer for the way a mortgage company does business on the buy side,” Brown said of the proposal. “So classification is a big thing.”

The Detroit-based megalender hasn’t been spared the market turmoil, offering voluntary stockpiles to employees last spring and more. recently cut. Rocket Money, formerly TrueBill, is the company’s only acquisition since going public in 2020, and Brown said it is the company is looking at acquisition opportunities but has not yet made any investments.

Other major investors were active in the mortgage market, raise small investorsotherwise groups of workers who have left companies have suffered from the market downturn in the past year. Last year’s stock market boom was the main driver of M&A activity last year, according to Stratmor Group.

The consolidation will continue but at a slower pace, due to the capital formation of the industry in the last few years, said Brown. Rocket, which was still doing well in the third quarter of last year, it had $8.8 billion in profits and about $20 billion in deposits. In order to monitor the health of the lenders that continue, business observers must monitor the ability of companies to meet the requirements of the agreement, update warehouse lines and their activities in the market of mortgage rights, of said Brown.

The first MSR portfolio above $ 10 billion recently went up for bidding, and even larger deals are rumored to enter the market. pertaining to Wells Fargo’s mortgage is pulled. The pool of MSR buyers is limited to large companies, and any pullback from an institutional seller can result in more supply than demand. it affects prices.

“Watch the money carefully because if it is necessary to sell these assets, to finance the working capital, that situation can be a challenge because there are problems in the time,” he said.

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