As the mortgage industry braces for a decline in activity, Rocket Companies Inc RKT CFO Brian Brown predicts that consolidation will be necessary, but potential homebuyers may see a silver lining in the form of lower home prices.
What Happened: According to an analysis by Fitch Ratings, home values in the U.S. could drop as much as 5% this year, while some economists call for a drop of as much as 20%.
Despite the potential pain, the executive believes that a slight decrease in prices could be beneficial for first-time home buyers who have been priced out of the market.
Read also: Expert Advice For Homebuyers In 2023: Look For This In The Market
Rocket plans to leverage its pool of first-time homebuyers to remain profitable and avoid entering the crowded merger and acquisition market.
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Brown suggests that industry watchers should pay close attention to firms' ability to meet contract requirements, renew warehouse lines of credit, and monitor activity in the rights market in order to gauge the health of lenders.
Why It Matters: Despite the tumultuous market, Rocket voluntarily offered buyouts to employees and made one acquisition, Rocket Money, formerly known as TrueBill.
However, while other industry giants have been busy snapping up smaller lenders, Rocket has yet to make any further investments. According to Brown, consolidation in the industry will continue, but at a slower pace as companies have built up a significant amount of capital in recent years.
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