Speaking Tuesday at the Goldman Sachs U.S. Financial Services Conference, Rocket Companies Chief Financial Officer Brian Brown said the company is seeing “the largest pipeline ever” in its history of interested home buyers.
The challenge, though, is getting them into homes when home inventory is limited and mortgage rates haven’t come down as quickly as expected.
“But we have a lot of reasons to be optimistic,” Brown said of the mortgage market next year. “There are some green shoots. Almost every forecast we look at has 2025 growing over 2024 – the only question is, ‘How much?’”
“The tale of the past 18 months has been sometimes cash buyers winning out” at purchasing homes, Brown noted. “So I take a step back and I look at inventory, and I don’t know exactly where rates will go; I’m not exactly sure about affordability. But I look at inventory and I look at demand, and we’re starting to see some things cooperate, and that gets us really excited about ‘25.”
He addressed Rocket’s strategy to grow in a volatile market, stressing that the company is “laser-focused on homeownership as a category.” There, Rocket only has single-digit market share.
Brown also pointed to Rocket’s diversity of business, since the company is a direct-to-consumer lender, a wholesale lender, and a servicer, whereas other companies typically are only one of those things.
“It’s really a three-pronged approach” for growth in 2025, he said. “We have a lot of room to run in the direct-to-consumer business in the company; wholesale continues to be very interesting, especially in a heavy purchase environment; and then continuing to reload the servicing portfolio.” On that note, he pointed to an area for improvement: Brown said industry-wide, only 20% of people getting their second mortgage go with the same company they used for the first, and Rocket is looking to benefit from its 85% recapture rate.
Meanwhile, bringing on Varun Krishna as Rocket’s CEO in 2023 has been “a huge, huge accomplishment,” Brown contended, and has changed the company’s leadership structure and strategy. He said Krishna has brought in new leaders from different categories and with different ways of thinking, pairing them up with existing leadership.
The end result for Rocket, according to Brown, has been a continuation of a growth mindset paired with good technology, good people, “a whole new” Chief Marketing Officer Jonathan Mildenhall, and a brand restage coming soon. “We feel like we’re in a really good place,” Brown said.
Brown noted that traditionally, mortgage companies have scaled up or down by adjusting human capital and spoke of instead expanding the capabilities of Rocket’s existing talent through artificial intelligence and technology investments, though he didn’t note specific numbers.
“In order to operate in a dynamic market, it comes down to investments in technology,” Brown said. “You still need really, really good talent, and you still need really good team members, but you need to empower them with technology and AI to make them more scalable.”
For consumers, speaking to a human will still be important, he emphasized, but there are ways of getting at those consumers better with data. And mortgage companies have lots and lots of data – and thus an excellent opportunity for the use of AI. Brown admitted he was “skeptical” of the immediacy of AI's impact on the industry, but has been impressed with the technology's capabilities thus far.
“If you’re applying for a mortgage, we probably know more about you than your doctor or psychologist or you name it,” Brown quipped. “If you think about it, we know how many kids you have, we know how you work, we know how much you make, we know how much you have in savings, we know your Social Security Number, and the list goes on and on.”
“You’re sitting on a really rich set of data,” he added – noting that much of what Rocket does as a company is ripe for automation.
