Rocket Mortgage had its best-ever quarter in purchasing credit in the three months ended June 30, largely thanks to partnerships with mortgage brokers and real estate agents, the company reported Thursday.
The shares of the parent company Rocket Cos. Inc. rose more than 5 percent in after-hours trading as company executives expected to break last year’s record of $ 320 billion in mortgage refinancing and purchase loans.
Mortgage lending was $ 83.8 billion in the second quarter, up 16 percent from Q2 2020. Loans through Rocket Mortgage’s partner network totaled $ 38.5 billion, 45 percent more than a year earlier , while consumer direct selling essentially stagnated at $ 45.2 billion.
All in all, these loans were less profitable, and the profit margin dropped to 2.78 percent from 5.19 percent a year earlier. Revenue from income from the sale of loans was $ 2.34 billion, down 51 percent from $ 4.75 billion for the same quarter last year.
Rocket Cos. – the holding company of Rocket Mortgage, Rocket Homes, Amrock and Rocket Auto – posted net income of $ 1 billion on sales of $ 2.7 billion in the second quarter. That compares to net income of $ 3.5 billion on revenue of $ 5 billion in the second quarter of 2020.
During a call with investors, Rocket Cos executives stressed. Revenue and earnings for the second quarter under “pre-COVID” 2019 terms, saying historically low interest rates and limited industry capacity boosted lending and profits during the pandemic.
Thanks to Rocket Mortgage’s refinancing strength, the company was the country’s largest mortgage lender last year. Now the company is optimistic it can beat last year’s record lending by expanding its purchase credit business through partnerships with real estate agents and mortgage brokers.
“Our record mortgage volume is well on our way to our goal of becoming the largest residential home lender in the country by the end of 2023,” said Jay Farner, CEO of Rocket Companies Inc., in a statement. “This strong momentum will carry us into the second half of the year as we expect our mortgage lending volume in 2021 to exceed the record $ 320 billion in 2020.”
Rocket’s partner channel includes mortgage brokers, community banks, and credit unions. Rival United Wholesale Mortgage (UWM) has tried to limit Rocket’s growth in this space by refusing to do business with mortgage brokers who refer business to Rocket or Fairway Independent Mortgage.
Also Rocket Cos. ‘ Real estate broker Rocket Homes transferred $ 2 billion in sales to real estate agents in the second quarter, with Rocket Mortgage contributing 70 percent of the deals.
That 70 percent mortgage rate “is among the highest in the industry,” the company said, citing the “increased levels of engagement experienced when customers work with both Rocket Homes and Rocket Mortgage” to lead conversion to increase.
Rocket Homes has obtained real estate agent licenses in all 50 states to fill a property search page with MLS listings and earn brokerage fees. Traffic on the RocketHomes.com search site reached 2 million average unique monthly visitors in the second quarter, a six-fold increase from last year, the company said.
Rocket Homes positions itself as a provider of a full range of services complemented not only by Rocket Mortgage but also by Amrock, a provider of property insurance, real estate appraisals and settlement services.
Amrock was involved in 260,300 closings in the second quarter, 8 percent more than a year ago and 193 percent from two years ago.
Rocket said it will introduce an iBuyer program “in the next few quarters” through external partner companies.
Rival LoanDepot, which also posted a record purchase credit in the second quarter, is pursuing a similar growth strategy, leveraging its technology platform to build partnerships and add on ancillary businesses such as titles and escrow.
Rocket Homes announced this week that it plans to go further by hiring real estate agents and starting an iBuyer program. Employees working remotely from Detroit offer services to sellers nationwide at a discounted commission rate of 1.5 percent.
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