A closer look at Rocket Mortgage’s Q1 results

In today’s HousingWire Daily episode, HousingWire Junior Digital Producer Victoria Jones joins HousingWire Managing Editor James Kleimann to discuss the hottest topics coming across HousingWire’s news desk. In this episode, Jones and Kleimann examine Rocket Mortgage’s Q1 results and what those could mean for the mortgage market. 

During the episode, Jones and Kleimann also review what’s happening with the QM rule and discuss what challenges some VA borrowers are facing in today’s housing market. 

The pair also review last week’s biggest stories, and the topics the HousingWire editorial team will cover in the week ahead.

For some background on the interview, here’s a brief summary of HousingWire’s coverage of Rocket Mortgage’s Q1 results:

Rocket Mortgage originated more than $100 billion in mortgages for yet another quarter, but profit margins are trending down. And the country’s largest mortgage lender expects a good-sized slowdown in the second quarter of 2021.

All told, the Detroit lending powerhouse originated $103.6 billion in closed loans in the first quarter of 2020, more than double its originations in Q1 2020. Rocket Mortgage also reported net income of $2.77 billion, a dramatic increase from the $99 million in profit the first quarter of 2020. And revenue was $4 billion, well above the $2.1 billion in the first quarter of 2020.

“The combination of our technology platform and Rocket Cloud Force of highly trained professionals, continues to deliver scalability and a client experience that is unmatched,” CEO Jay Farner said in a statement Thursday. “In fact, this was the sixth consecutive quarter where our team was able to double the company’s home loan volume year-over-year.”

But like virtually all mortgage lenders of late, the uptick in interest rates and the weight of a larger workforce has dragged down profits. Rocket’s gain-on-sale margin in the first quarter checked in at 3.74%, a 67-basis point decline from the 4.41% margin recorded in the fourth quarter and a 78 bps decline from the third quarter of 2020. Expenses rose to $1.74 billion, up from about $1.26 billion in the first quarter a year ago.

In the second quarter, Rocket Mortgage is forecasting closed loan volume of between $82.5 billion and $87.5 billion and net rate lock volume of between $81.5 billion and $88.5 billion. Gain on sale margins are projected to slip to between 2.65% and 2.95%.

HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Jones.

HousingWire articles covered in this episode:

HousingWire Daily

Hosted by the journalists behind the headlines, HousingWire Daily examines the most compelling mortgage, real estate, and fintech articles reported from the HousingWire newsroom.

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