Rocket Companies (NYSE:RKT), UWM Hldgs (NYSE:UWMC) – Housing activity ‘plunged’ as mortgage rates hit 15-year highs – A chart that says it all

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According Freddie Mac FMCC Data.

The 30-year fixed rose from 5.66% to 5.89%. The long-term rate has not been this high since November 2008, shortly after the Great Recession was triggered by the housing market crash.

In 2021, the 30-year fixed was 2.88%. The typical 15-year fixed mortgage rate fell from 4.98% to 5.16% last week. The rate at this time last year was 2.19%.

See also: House prices jumped just 0.1% last month, but that could be a sign for the next big price hike: here’s why

Rates fell in July and the first days of August as recession fears mounted. Rates reversed higher after Fed Chairman’s hawkish remarks Jerome Powell at the central bank conference in Jackson Hole last month; Investors’ attention was again drawn to the Fed’s efforts to bring inflation down, which is hovering around 40-year highs.

Potential buyers lose interest

“Door-to-door activity fell and the share of sellers lowering their price remained near an all-time high,” wrote Redfin Corp. RDFN in a statement Thursday.

Sales of existing homes in the United States have fallen for six consecutive months, according to the National Association of Realtors.

Fewer people searched for “houses for sale” on Google. In fact, searches in the week ending September 3 were down 25% from a year earlier.

  • Touring activity as of September 4 was down 38% from the start of the year at Redfin, compared to a 3% increase in the same period last year.
  • Mortgage purchase applications were down 1% week-over-week, seasonally adjusted, and down 23% from a year earlier in the week ending September 2.

Affected lenders

Mortgage lender Home Point Financial, a subsidiary of Point d’Accueil Capital Inc. HMPT announced plans to lay off 526 staff from November 1, due to falling demand in homes

Mortgage originator Rocket Companies Inc. RKT spent $61 million in the second quarter on voluntary 8% buyouts of Rocket’s operations team and other groups in its Amrock title and valuation business. Rocket issued a second, smaller, voluntary buyout to an undisclosed number of employees at its multiple businesses in August.

Re/Max Management Inc. RMAX said in early July that plans were to cut 17%, or 120 staff, affecting the company’s technology workers, including operators of the “book” platform, its customer relationship management software for customers. brokers and agents.

The industry is consolidating

Two direct-to-consumer lenders AmeriSave Wholesale Mortgage Solutionsand Suburban Mortgage Inc. abruptly closed at the end of August.

First Guaranty Mortgage Corp. FGBI and Sprout Mortgagein addition to real estate fintech Reali announced its intention to close its doors on September 2.

With consolidation in the industry and fewer wholesale lenders to contend with, companies like UWM Holdings Corp.. UWMC can benefit because there are a finite number of mortgages to create.

UWMC could gain market share with every store that closes.

Image: Pixabay

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