Shares of Rocket Companies, the parent company of Rocket Mortgage, fell sharply on Thursday, extending a losing streak as rising borrowing costs and broader market weakness weighed on housing stocks. The stock closed at $14.58, marking a decline of approximately 3.7% for the session and its third consecutive daily drop.
Mortgage Rates Climb, Pressuring Demand
The decline coincided with a notable increase in mortgage rates, a critical factor for Rocket's core lending business. According to data from Freddie Mac, the average interest rate on a 30-year fixed mortgage rose to 6.11% this week, up from 6.00% the prior week. Higher rates typically dampen demand for both new home purchases and refinancing activity, which are vital revenue streams for the company. Freddie Mac's chief economist, Sam Khater, noted that homebuyers have shown some resilience to rates at this level, pointing to a 1.7% increase in existing-home sales for February and stable purchase application volumes.
Broader Market and Sector Weakness
The trading session proved difficult for equities overall. The Nasdaq Composite Index slid 1.78%, pressured by rising oil prices and renewed concerns about inflation. Mortgage and housing-related stocks were particularly hard hit. Shares of United Wholesale Mortgage parent UWM Holdings fell 4.6%, while PennyMac Financial Services declined 3.5%.
Mixed Signals from Housing Data
Recent housing data presented a nuanced picture. Redfin, which operates on Rocket's platform, reported a 0.5% annual increase in new U.S. home listings for the four-week period ending March 8. This marked the first year-over-year gain since November. Anecdotal evidence from agents, such as Justin Gomez in Omaha, suggested increased competition for lower-priced homes, with some properties entering bidding wars.
However, refinancing activity remains subdued despite a sizable opportunity. Redfin reported that 19.8% of homeowners with mortgages could currently reduce their payments by refinancing at the prevailing average rate of 6.08%—the highest share in over four years. Yet, only 9.1% of those eligible borrowers have acted. Rocket's chief business officer, Bill Banfield, emphasized that even a modest decline in rates could significantly lower monthly payments and total interest costs for homeowners. This dynamic leaves investors questioning how much of Rocket's future growth will stem from purchase mortgages versus a potential refinancing wave.
Financial Performance and Strategic Moves
Rocket's recent financial results have shown underlying strength. On February 26, the company reported adjusted fourth-quarter revenue of $2.44 billion, exceeding the high end of its own guidance. For the current first quarter, management has issued a revenue forecast ranging from $2.6 billion to $2.8 billion.
The company has also been actively expanding its ecosystem through partnerships and acquisitions. Rocket and real estate brokerage Compass announced a three-year partnership expected to funnel over 500,000 additional listings onto Redfin, generate more than 1 million buyer inquiries for Compass agents, and offer select clients benefits like a one-point mortgage rate reduction for the first year or up to $6,000 in lender credits. "When barriers are removed and supply grows, affordability improves," stated Rocket CEO Varun Krishna.
Near-Term Challenges and Expansion
Significant headwinds persist. A Redfin economist warned that surging oil prices could push headline inflation to 3% in March, potentially creating further volatility for mortgage rates. Furthermore, a Redfin-Ipsos survey found that one in four Americans is postponing or canceling a major purchase, such as a home or car, due to geopolitical tensions involving Iran.
Rocket has spent the past year aggressively building a larger platform. In March 2025, the company entered into an agreement to acquire Redfin for $1.75 billion. Shortly thereafter, it completed a $14.2 billion buyout of Mr. Cooper, significantly expanding its mortgage servicing operations. The central question for investors now is whether this expanded, integrated business model can generate sufficient growth to overcome persistent pressure from elevated interest rates.
