In late 2020, 19 million American homeowners could've saved money by refinancing their mortgage. Today that number stands at just 133,000, according to mortgage data and analytics company Black Knight—which isn't great news for the nation's largest home lender. For most of last year, 1 in every 14 mortgages went through Rocket Mortgage, and refinancing made up the lion's share of that, making up 82% of the total dollar volume of its loans. The tables have turned, with Rocket's loan volume tracking to drop by more than 50% this year, reports the Wall Street Journal. In the Journal's view, "how the company and its peers adjust to this new reality will be an early test of corporate America's ability to withstand the Fed-induced economic slowdown."
Rocket has responded by switching gears, offering mortgages on new home purchases with a lower interest rate for the first year, and pushing customers toward cash-out refinancing, which means swapping a mortgage for a larger one, allowing homeowners to turn equity into cash. But getting someone to abandon a mortgage with a 3% interest rate for one with a 6% interest rate is like "pushing rocks up hills," a mortgage banker who recently left Rocket tells the Journal. At the end of September, applications to refinance a home loan were down 84% year over year for a 22-year low, per CNBC. Earnings at parent company Rocket Cos. have fallen dramatically, and it's expected to post its first loss since going public in 2020 in reporting its third-quarter results on Thursday.
Rocket hasn't cut bankers like other mortgage lenders. But it's pushing employees to keep up with sales targets and hoping those who don't will accept buyouts. Though sales targets have been lowered, "rankings for one group showed that just over a fifth of bankers hit their goals in August," per the Journal. In the spring, Rocket asked employees to work on weekends if they weren't on pace to meet at least 70% of their goal; some employees say they've taken medical leave because of work stress. Thousands of employee complaints are popping up on social media. One former banker who quit Rocket in July tells the Journal that she was working six days a week, and that once-plentiful leads had slowed to a trickle. (Read more mortgage lender stories.)