Rate Rises and Trends in 2022

February gives us more information about how 2022 might look as we move through the year.

The mortgage industry was exceptionally busy last year with refinances as many homeowners took advantage of the lowest rates in years to refinance. Buying into the American Dream to own a home as a first-time buyer took more time as all lenders were striving to process every request while also working with a reduced workforce due the continuing pandemic.

As the Federal Reserve is expected to increase interest rates early this year, it’s an important time for our community to take stock of the many choices we have for financing and to weigh them carefully. As many of you follow this column, it may seem like I’m in a loop in my conversation about recommending utilizing a local supplier for a home mortgage. Here’s why it’s more important this year in context of what is happening with an example of one largely advertised online brand.

Rocket Mortgage made it big during the pandemic. Most people are familiar with what the brand represents. I’d like to share a little more than you might hear in an advertisement for you to understand my perspective.

The Detroit-based online lender became the largest lender in the United States and represents more home loans than Wells Fargo & Co. and JPMorgan Chase & Co. together. According to Inside Mortgage Finance, an industry research group, the Detroit Company represented one out of every 14 mortgages completed in 2021.

The part that I give pause to as a trend is that Rocket just recently went public in 2020. The stock started at $18/share and is trading around $14 in 2022. Of course, Rocket holds the place it has in the market at a time when large banks stepped away from the mortgage industry. Additionally, I give pause to the fact that the Detroit lender took in a lot of refinancing business that is most likely not going to continue.

The Detroit Company has announced that just as it now connects homes to buyers through a platform similar to Zillow, they recently agreed to buy Truebill. This company is a startup organization that helps people to cancel subscriptions. The company has stated to investors that it plans to keep its name in front of people by expanding into different areas of the finance market.

Other online mortgage lenders are experiencing a similar trend in their public trading values. The values are declining as investors are not certain that there is the same viability as there was in a hot housing market for the online platforms.

Local lenders like Finance of America have placed more emphasis on the people who are there to help. Many online lenders like Rocket put billions into technology.

Super Bowl season is upon us. Four of the last six years have been filled with aggressive advertising by the Detroit-based Company. I never thought I’d be watching through the advertising of the Super Bowl for mortgage industry advertisements! I believe the Detroit-based lender is going to become something different in the future.

As always, be sure to find a licensed advisor that you know is familiar with your region, who serves your best interests, your community, and has history in the community as well as will be there for you for the duration.

Call 360-607-9312 or email MPattullo@FinanceOfAmerica.com for help preparing your credit application to best evaluate your mortgage options. We are your local advisor.

We lend where we live,
Mike