Home News Rocket Companies ekes out $60M Q2 profit, does cost cuts

Rocket Companies ekes out $60M Q2 profit, does cost cuts

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Dan Gilbert’s mortgage company continues to feel a nationwide slowdown in the housing market and is tightening its belt.

Rocket Companies, the publicly traded parent company of Rocket Mortgage (formerly known as Quicken Loans), said late Thursday that it had a net profit or profit of $60 million for the second quarter and 10 for the same quarter in 2021. reported down from just over a billion dollars. .

Total revenue for the quarter also decreased from approximately $2.7 billion to $1.4 billion.

Rocket cut about $300 million in expenses in the second quarter and is on pace to cut an additional $50 million to $150 million in the current quarter, according to Supreme. Finance chief Julie Booth said on Thursday’s earnings call.

In April, Rocket launched a voluntary acquisition of hundreds of employees. Most of the cost savings came from these acquisitions and reduced marketing and vendor expenses, she said.

Company officials did not disclose how many employees have opted for the acquisition.

Rocket Companies had a total of 26,000 employees in the United States and Canada at the end of last year, according to an annual report from the U.S. Securities and Exchange Commission (SEC).

“We’ve seen a dramatic shift towards a smaller mortgage market,” Booth said. “Purchase demand has also been impacted as consumer sentiment declines at a record pace to levels not seen in more than a decade, economic uncertainty looms, and fears of a potential recession rise. increase.”

According to the Mortgage Bankers Association, the entire mortgage industry is currently in a recessionary cycle, with mortgage originations expected to fall 40% this year from 2021 levels due to higher mortgage rates and lower home sales and refinancing. Predicted.

Mortgage lenders nationwide, including Metro Detroit, reducing staff Since the end of the 2020-2021 refinancing boom.

Rocket CEO Jay Farner said he believes the entire mortgage industry will shrink further in the coming months.

However, Rocket intends to maintain “surplus capacity” in terms of headcount so it can grow later, he said.

“As we move into 2023 and gain market share again, we will need that capacity,” Farner said. It doesn’t make a lot of sense for us to have to.”

Mortgage rates rose throughout the second quarter, reaching almost 6% in June, but have since declined.

Average 30 year fixed rate mortgage rate this week 4.99%, according to the government-backed Freddie Mac. This is about the same rate as in mid-April.

Meanwhile, sales of existing U.S. homes this year are down every month compared to last year, according to the National Association of Realtors.

Rocket Mortgage is the nation’s largest mortgage lender. Shares climbed 4 cents on Thursday to close at $10.29, but fell in after-hours trading.

more: Ford triples second-quarter adjusted profit, reports $3.7 billion

more: GM reports 39% decline in Q2, net profit hits $1.7 billion, warns of cost cutting

Pontiac-based United Wholesale Mortgage is expected to report second-quarter earnings on Tuesday.

contact JC Reindle and 313-378-5460 or [email protected]. follow him on twitter @jeklindol. read more work and sign us up business newsletter.

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