Is the Price War in Mortgages Over?
Last year ended up being a great time for the mortgage originators. The economic fallout from the COVID-19 pandemic pushed the Federal Reserve to cut interest rates to the floor in order to support the economy. This kicked off a refinancing boom that was the best environment for mortgage originators since the early 2000s. Some originators, like Rocket Companies (NYSE: RKT), took advantage of the environment to go public.
But the salad days of 2020 have turned into a much more competitive environment in 2021, and originators are making much less on a loan than they did a year ago in an effort to milk every last bit of potential profit from the home-buying trend. That has led to a pricing war and a drop in margins. Some have wondered how long competitors in the industry could keep it up.
Rocket recently reported second-quarter earnings, and its guidance gave an indication that the price war might be de-escalating.
Source Fool.com
