Rocket closing in on 10% of the mortgage market

Lender generated $1.4 billion in net income in the third quarter, a 34% gain on Q2 2021

Jay Farner, CEO of Rocket Companies

Rocket Companies, the parent of Rocket Mortgage, generated a whopping $1.4 billion in net income in the third quarter, up from $1 billion the previous quarter.

According to the company’s earnings released on Thursday, Rocket originated $88 billion in mortgages, with a net-rate lock close to $87 billion in the third quarter.

Rocket’s gain on sale margin rose by 27 basis points to 305 bps, a significant leap from 278 bps in the second quarter. The margin boost came in part due the removal of the controversial adverse market fee by the Federal Housing Finance Agency in July, Julie Booth, chief financial officer of Rocket Companies, said during the company’s third quarter conference call.

Booth noted that the third quarter “marked a new company record” with purchase closed loan volume growing 70% year over year.

“In fact, both our direct consumer and partner networks generated all time highs for purchase volumes,” she added.

This growth was “driven by [the company’s] focus on a superior, technology-driven client experience, product innovation and our integrated, end-to-end home buying ecosystem,” the top-ranked multi-channel lender said.

Rocket disclosed that its retention rate was 91% year over year, which it bragged was “unmatched” in the mortgage industry.

“We had an excellent third quarter, as we executed on our mission to remove friction from life’s complex moments,” said Jay Farner, vice chairman and CEO of Rocket Companies. “Our core mortgage business exceeded the high end of guidance for closed loan volume and gain-on-sale margin, while achieving record purchase volume.”

Farner also noted that Rocket expects to hit double-digits in terms of overall market share in 2022, one that will be “purchase-heavy.” The company heavily stressed that it is concentrating its efforts to market cash-out refis and purchase mortgages.

“We are projecting to go north of 10% market share,” Farner said. “We have been consistently growing market share, regardless of the size of the pie.”

Rocket Pro TPO, the wholesale division of Rocket Mortgage, saw nearly 3,000 new brokers join the platform in the third quarter. Rocket said that it “grew its partner wallet share from 36% in March to more than 50%” during the third quarter.

“We are excited about how our partners are committing to working with Rocket,” said Farner. “In addition, overall market share is up 2-3%, as our growth in that market continues.”

He added, “We are uniquely positioned to continue to invest into the TPO business because of how well diversified our entire business is. I look at that as an opportunity as it becomes more challenging for more mono-line mortgage businesses to do that, as an opportunity for us to continue to invest, increase wallet share and set us up for an even more profitable business.” 

In October, Rocket Pro TPO announced numerous initiatives to continue improving and growing its broker channel, including connecting broker partners with real estate agents through Rocket Homes, the company’s real estate listing platform.

Additionally, the lender promised to “protect” newly built relationships between mortgage brokers and real estate agents.

Rocket said it expects to close between $75 billion and $80 billion in mortgages in the fourth quarter. Gain-on-sale margins are projected to come in between 265 and 295 bps.

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