Rocket Cos. profit falls 63% year-over-year to $1 billion
Rocket Companies Inc., the Detroit-based parent company of mortgage lending giant Rocket Mortgage, on Tuesday said first-quarter profit was down roughly 63% year-over-year as the mortgage lending industry faces headwinds including rising interest rates.
Rocket posted net income of approximately $1 billion on net revenue of nearly $2.7 billion. That's down sharply from the first quarter of 2021, when the company reported net income of nearly $2.8 billion on revenue of $4.5 billion.
"Rocket delivered a solid performance in the first quarter and achieved our best Q1 volume in purchase and cash out refinances, even as rates rose rapidly," Jay Farner, vice chairman and CEO of Rocket Cos., said in a statement.
Rocket Mortgage generated approximately $54 billion in mortgage origination closed loan volume, down nearly 58% from the same period last year. The company's gain-on-sale margin for the quarter was 3.01%, down from 3.74% in the first quarter of 2021.
"Now, as we move further into the year, we will successfully navigate the mortgage and real estate headwinds by protecting our margin and profitability while continuing to invest in strategic areas such as technology, partnerships and performance marketing to grow share and expand our business for the long term," Farner added.
The report follows the recent announcement by Rocket Mortgage and title insurer affiliate Amrock LLC that they offered buyouts to 8% of their workforce.
The Federal Reserve recently hiked its benchmark interest rate by 0.5% and signaled it expects to further raise rates later this year in a bid to curb inflation. The average 30-year fixed mortgage rate was 5.54% on Monday, according to Bankrate.
Meanwhile, competitor United Wholesale Mortgage Holdings Corp. on Tuesday reported that net income fell 47% year-over-year in the first quarter.
The Pontiac-based lender that originates mortgages only through independent brokers posted a net income of $453.3 million on $38.8 billion in loan origination volume for the quarter. That was down 21% year-over-year, though the company posted a record in closed purchase volume.
At the end of the first quarter, Rocket had $2.3 billion in cash on hand and liquidity of $7.7 billion. It reported mortgage servicing rights valued at $6.4 billion.
In the second quarter, Rocket forecasts it will have closed loan volume of between $35 billion and $40 billion and gain-on-sale margins of 2.6% to 2.9%.
Staff Writer Breana Noble contributed.