Core Insights - The Zacks Mortgage & Related Services industry is experiencing benefits from declining mortgage rates, which are driving improvements in purchase originations and refinancing volumes [1][3][4] - Increased competition is pressuring mortgage servicers to cut prices, leading to reduced sales margins [1][5] - Companies like Rocket Companies and LendingTree are well-positioned to navigate the challenges posed by the competitive landscape [1][16][19] Industry Overview - The Zacks Mortgage & Related Services industry includes providers of mortgage-related loans, refinancing, and loan-servicing facilities, with non-banks gaining market share as banks retreat due to compliance and capital requirements [2] - The industry is heavily influenced by Federal Reserve interest rates, which affect customer decisions regarding mortgage applications [2] Trends - Mortgage rates have decreased significantly, with the 30-year fixed-rate mortgage dropping from above 7% to around 6%, stimulating renewed interest in purchase applications [3] - The Federal Reserve's recent rate cuts are expected to improve housing affordability, leading to increased demand for mortgages and refinancing activities [4] - The U.S. single-family mortgage debt is projected to grow due to house price appreciation, although competition may hinder profitability for many originators [5] Performance Metrics - The Zacks Mortgage & Related Services industry holds a Zacks Industry Rank of 95, placing it in the top 39% of over 243 Zacks industries, indicating positive prospects [6] - Over the past year, the industry has underperformed compared to the broader Zacks Finance sector and the S&P 500, with a growth of 15.9% compared to 16.7% and 20.5% respectively [8][9] Valuation - The industry currently trades at a price-to-book (P/B) ratio of 6.58X, lower than the S&P 500's 8.93X, indicating a premium compared to the broader Zacks Finance sector's P/B of 4.27X [12][14] Company Highlights - **Rocket Companies**: This fintech platform is increasing its market share through process optimizations and recently acquired Mr. Cooper Group, enhancing its position in the mortgage servicing and origination space. The Zacks Consensus Estimate for its 2025 earnings is 25 cents per share, reflecting an 8.7% increase year-over-year, with revenues expected to rise 16.6% [16][17] - **LendingTree**: The company is focusing on improving purchase conversion rates and diversifying its offerings beyond mortgages. The Zacks Consensus Estimate for its 2025 earnings indicates a 36.9% year-over-year increase, with revenues anticipated to grow 14.9% [19][20]