Here's Why Shares of Rocket Companies Are Down 18% This Week
For the week, shares of the mortgage originator Rocket Companies (NYSE: RKT) had fallen more than 18% in the final hour of trading Thursday, according to data provided by S&P Global Market Intelligence, as soaring interest rates continued to spook investors.
Rocket is the largest mortgage originator in the country and performed extremely well in the ultra low interest rate environment seen in 2020 and 2021 because homeowners wanted to refinance. But as the Fed has aggressively raised its benchmark lending rate, the federal funds rate, mortgage rates have shot up, recently surpassing 6%. Nobody is going to want to refinance right now.
This has significantly cut into mortgage volume and Rocket's gain-on-sale margins, which make up the bulk of Rocket's revenue.
Source Fool.com
