RKT - Rocket Companies Is Materially Overpriced Considering The Interest Rate Outlook
2024-03-28 19:15:05 ET
Summary
- Rocket is a mortgage banker, not a fintech, as its earnings are closely tied to its loan origination volume.
- I expect U.S. mortgage originations to improve but modestly because mortgage refinancing should remain historically low.
- The fact that the Federal Reserve is not supporting either the MBS nor the Treasury markets should keep mortgage rates above 6% for the foreseeable future.
What Rocket is – a mortgage banker, not a fintech
Rocket describes itself as follows in its 2023 10-K:
Rocket Companies Is Materially Overpriced Considering The Interest Rate Outlook“We are a Detroit-based fintech company including mortgage, real estate, and personal finance business. We are committed to delivering industry-best client experiences through our AI-fueled homeownership strategy. Our full suite of products empowers our clients across financial wellness, personal loans, home search, mortgage finance, title, and closing.”