Why Investors Should Be Cautious About loanDepot Despite Record Earnings

Mortgage markets were blistering hot last year. Driven by historically low interest rates, homeowners refinanced at a record pace in 2020. According to Black Knight, mortgage originations totaled $4.3 trillion last year, with refinancings making up $2.8 trillion -- the highest level on record.  

Many finance lenders used the red-hot market as an opportunity to go public. Big names like Rocket and UWM Holdings hit the public markets last year, while loanDepot (NYSE: LDI) made its public debut earlier this year.

It's been a good start for loanDepot, which reported solid first-quarter earnings, but investors are cautious as mortgage markets cool down amid gradually rising interest rates. Not only that, but the lender faces intense competition in the mortgage space as competitors aggressively look to grab market share.

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Source Fool.com