Rocket Companies Inc. Q1 2023 Earnings Call
<unk> ability and credit worthiness spending behavior finances home buying intent and more.
We believe that these clients are more open to transacting with rocket.
Through our full end to end home buying ecosystem, we can help our clients at every step of the homeownership journey.
The financial planning, an educational process well before they apply for a mortgage to searching for and ultimately the financing of their new home.
With our client engagement program, which includes rocket money rocket rewards rocket signature card and the home buying plan, we now have multiple ways to acquire and engage our clients.
This provides us with valuable data insights earlier in the process indicators of home buying intent that are particularly valuable given the high client acquisition cost and the lengthy off to complex nature of a purchase transaction.
Helping us personalize the right offering at the right time.
We believe this engagement will help grow our market share in purchase as well as lower our client acquisition cost meaningfully lift conversion from lead to close increase retention and extend client lifetime value.
All of these initiatives set rocket up for a bright future.
This being my last earnings call I'd like to thank the amazing team members that I've worked with for the past 27 years for their passion and commitment.
Having worked alongside Bill now for many years I'm certain there is no one more qualified to take the interim CEO role, while the company's searches for a permanent successor.
And I will continue to work together over the next months, helping to ensure a smooth transition with that I'll turn it over to bill.
Thanks, Jay great to be here today over.
Over the past few months I've had a chance to work closely with Jay and the phenomenal team members across our organization.
I'm excited about rockets future as we continue to execute on our strategy.
We have an ism at rocket innovation is rewarded execution is worshiped we laid important groundwork last year and now is the time for us to execute and continue to grow our purchase market share in a purchase.
<unk> market.
Rockets opportunity is significant the mortgage industry is large and fragmented on the traditional mortgage experience is complex frustrating and difficult for clients to navigate.
With our end to end ecosystem rocket strives to make the home buying and home ownership experience simpler and more accessible for our clients.
We are dedicated to delivering the best client service, leveraging our unique resources and the breadth of our offerings.
<unk> plus our collaboration between rocket homes and rocket mortgage is a clear example of this with rocket money rocket card rocket rewards and rocket loans, we have the unique ability to serve our clients and more moments throughout their lives.
All while dramatically lowering our cost to acquire.
Rocket loans, our personal loans business.
As the biggest month of origination in the company's history in March and they are just getting started as they continue to build out their product agnostic lending platform driven by AI Decisioning that will help power financial transactions from everything ranging from personal loans financing solar installation.
Our client first lifetime value approach flipped the script entirely on what a great experiences and mortgage and beyond.
We are helping our clients prepare for homeownership and several other financial transactions and we are providing tangible value and an experience that can only be realized through rocket.
We are taking a new innovative approach to client acquisition retention and lifetime value that we believe will be a game changer for the industry and drive our continued growth in purchase.
Over time, we believe this will translate into substantial and sustainable growth and market share revenue and profitability.
I am excited to continue the work that Jay and our team members started and fulfill our mission to be the best at creating certainty and life's most complex moments so that our clients can live their dream.
That.
Brian will take us through the numbers.
Thank you Bill and good afternoon, everyone on today's call I'll cover the financial results for the first quarter of 2023, I'll also share our outlook for the second quarter discuss what we're seeing in the current environment and walk through how our unique and innovative approach to client acquisition and engagement is positioning rocket to lead the way and a purchase.
<unk> market.
<unk> is executing well in an uncertain macro environment in today's market, we're seeing strong client demand to purchase homes and we're entering the second quarter with a healthy approval letter pipeline.
On the supply side the market is still constrained by limited housing inventory.
This in perspective March existing home sales came in at a seasonally adjusted annual rate of $4 4 million homes, well below the 20 year average of over $5 3 million existing home sales per year.
Looking at it differently. There was two six months of housing inventory available in March which is less than half of what we would expect based on the 20 year average housing inventory is something we're watching closely as we enter the spring home buying season.
The challenging inventory levels and persistent affordability concerns that our clients are facing require unique solutions.
Take the buyer plus in southwest campaign that we've launched in early April This program addresses affordability concerns by providing clients that use both rocket homes and rocket mortgage a discount on their mortgage this is something that only rocket can offer at scale through our integrated real estate and mortgage experience also because of <unk>.
Our ability to capture the economics of the transaction from both the real estate side and the mortgage side rocket is uniquely positioned to provide consumers with meaningful savings on their closing costs.
The low levels of inventory are also contributing to a much longer home buying lifecycle compared to historical periods. While these dynamics presented a challenge for most lenders because it provides clients with more chances to switch during the process at rocket we view it as an opportunity with programs such as rocket rewards, which.
Advised clients with growing rewards as engagement increases there is a distinct and measurable benefit to staying with rocket throughout the process.
Moving on to the results rocket companies reported a solid first quarter against a difficult market backdrop adjusted revenue came in at $882 million above the high end of our guided range driven by strong client demand and solid execution in the first quarter, we generated net rate locks of one.
$19 5 billion.
30% increase from the fourth quarter, our gain on sale margin for the quarter was 239 basis points 22 basis points higher than the fourth quarter.
Regarding profitability operating losses in Q1 narrowed meaningfully relative to the fourth quarter of 2022, adjusted revenue increased by nearly $200 million quarter over quarter, while total expenses grew less than half that amount.
As a result, Q1, adjusted EBITDA loss of $79 million improved significantly compared to a $204 million loss in Q4 adjusted diluted EPS for the quarter also showed relative improvement coming in at a loss of <unk> <unk> per share.
We continue to execute a disciplined approach to managing our expenses in light of current volume levels and we remain focused on making the right long term investments.
I'd like to take a moment and talk about the positive impact we expect from our recent launches our client engagement program, which includes rocket money rocket rewards rocket signature card and home buying plan provides us with multiple avenues for client acquisition better engagement levels and improved lead.
Conversion.
As we've mentioned on prior calls the largest directed variable expense and a mortgage transaction is the cost to acquire this cost can run in the thousands of dollars per client and thats, not even including the cost associated with potentially re acquiring at a different time or down the road for another transaction in contrast rock.
Get monies cost to acquire is less than $100 and we see significant opportunity to lower our overall blended CAC by expanding our acquisition channels, keeping clients enter ecosystem and providing a best in class experience since.
Since our acquisition rocket money has played a meaningful role in expanding our client base, we reached $27 6 million rocket accounts in the quarter, representing an increase of more than $2 million sequentially, largely driven by rocket money.
Brackett signature card further diversifies, our acquisition channels, attracting clients, who have high intent to buy a home. The signature card also provides us with valuable insights that help us understand when our clients are ready to transact, thereby lifting conversion in the process.
To clarify that our intent with the signature card is not to compete with large credit card companies at scale, we launched our card to give our clients something of value capturing them earlier in their purchase journey and getting stronger signals on home buying intent.
But beyond acquisition, we now have even more reasons to engage with their clients and more ways to deliver tangible value.
Banking rewards points to save on closing costs, or providing financial wellness and education to make them more confident homebuyers well before they are ready to transact.
Along the way, we're able to gather data insights throughout the process, helping us to personalize the right offering at the right time with indicators of home buying intent that are particularly valuable given the high client acquisition costs and the lengthy often complex nature of a purchase transaction.
As Jay mentioned early signs of conversion lift are very encouraging.
The rocket rewards test group is seeing more than two times the conversion rate from lead to close compared to those who are not enrolled in the rewards program. We believe these higher conversion rates from rocket rewards applied to a larger client base could have a significant impact on our unit economics, when considering the multiple client engagement initiative.
As we have in place we believe the impact can be even greater.
We believe these innovative methods of client acquisition engagement and lead conversion will help drive our success in purchase and highlight our unique business model compared to other mortgage lending companies through superior unit economics, even higher retention rates and extended client lifetime value.
Turning to our balance sheet brackets financial strength continues to be an important strategic advantage for us. We ended the first quarter with $3 3 billion of available cash and $6 7 billion of mortgage servicing rights together. These assets represent a total of $9 9 billion.
Our balance sheet.
Our $3 3 billion of available cash consists of $900 million of cash on the balance sheet and an additional $2 $4 billion of corporate cash used to self fund loan originations.
Total liquidity stood at approximately $8 $1 billion as of March 31st including available cash plus undrawn lines of credit and our Undrawn MSR line.
As of March 31st our mortgage servicing portfolio included more than $2 5 million clients with approximately $525 billion in unpaid principle.
We also drive considerable recurring revenue from mortgage servicing during the first quarter, we generated $366 million of cash revenue from our servicing book, which represents approximately $1 $5 billion on an annualized basis.
Net client retention remained over 90% in the first quarter well above the industry average.
Turning to our outlook for the second quarter, we expect adjusted revenue to begin the range of $850 million to $1 billion.
We remain diligent in managing our expenses as we continue to monitor the broader environment with an eye towards profitability on an absolute dollar basis, we expect Q2 expenses to be modestly higher than Q1, driven by an increase in variable expenses due to higher production and investments in marketing spend.
And related to the launch of our signature credit card and nationwide by plus campaign. We are monitoring these marketing investments closely and we will adjust swiftly if they do not meet our expectations or if the housing market does not cooperate.
As always our forward looking guidance is based on our current outlook and visibility. Despite the continued uncertainty in the macro environment. We remain focused on serving our clients better and we are leading the way in bringing innovative products and solutions to market. We are well positioned in the current environment and will continue to execute on our strategy.
To deliver results and drive long term growth with that we're ready to turn it back over to the operator for questions.
Thank you.
Finally, I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad as a reminder to allow everyone an opportunity to ask a question. We ask that you. Please limit yourself to one question and one follow up we'll take our first question from Ryan Nash with Goldman Sachs. Your line is open.
Hey, good afternoon, everyone.
Hey, Brian .
So Jay and Bill you both referenced the success Youre, having in purchase can you maybe just talk about whether it's driving it what's driving whether it's some of these newer programs and can you maybe just talk about where you think this could mean for overall market share as we think about this next period of time here.
Well certainly, yes, I think we touched on this a lot throughout our prepared remarks.
To differentiate especially for us direct to consumer in many ways to differentiate we have to have experiences that allow our clients to come in the top of the funnel and remain with us as they search for homes and as Brian pointed out in his remarks with inventory levels down that lifecycle, maybe a bit longer.
I think it's encouraging to see approval ladders up because thats, telling us that that top of the funnel is growing the way that we want it to grow.
And I want to play.
Compliments to our team because I think when you look across the entire industry, it's hard to find a lender.
Outside of rocket that has a very unique marketing strategy with our bypass sell plus campaign.
Combined with the technology the rewards program the new signature card all of these things meant to contain and increase conversion. So as you can tell our focus is very strong on making sure that we can be a leader in purchase and again very proud of the team and the work that they've done this.
Seven or eight months to rollout all of these programs really.
The foundation was rocket money and that team there that allowed us to get going so.
Critically important for us it's going to be important for all lenders in the coming years, and we're very very focused on it I'll, let bill make any additional comments.
So I think you got to cover there Jeremy.
But so much great work has been done inside of the organization a lot of this stuff is just rolled out and so there's a lot of learning that's happening in a lot of adjusting and I think that will continue over the foreseeable months.
Yes.
Got it.
Maybe it's a follow up Brian you made a reference to an eye on profitability.
Do you see a near term return to profitability and what are some of the drivers thus far about volumes and revenues improving.
Seen capacity coming out that could help margins over time, maybe you can just flush out some of those comments you made.
Yes, sure Ryan So I mean looking at Q4 to Q1, we cut the operating loss in half margins have improved from Q4 to Q1 fairly substantially gain on sale margins that is and then we guided up revenue from Q1 levels to Q2 levels why did we guide up revenue because of some of the comments that Jim mentioned that.
<unk> demand is coming in very strong and we're very happy to see that that is helping the volume numbers on the gain on sale margin numbers to your point, yes. There is the price competition is lessening a bit and we're starting to see that translate in the gain on sale numbers. So if you think about what we've done over the past quarters and of course.
No this but we've gone hard on the expense side as well.
We are headed in exactly the right direction, we need a little cooperation from the housing inventory in the backdrop of the market, but I think we're doing everything right and we are absolutely within striking distance.
The final thing that I don't want to have missed our banking groups our operations groups. The NPS scores we talked about.
Very meaningful to excel in purchase our clients and real tours have to have confidence that we're going to deliver an amazing cloud experience is what we built the company on 437 plus years and see those NPS scores with our retail clients at I think 75%.
And with <unk> now north of 50% anything North of 50 is excellent.
Just kudos to our teams that are delivering that service.
Got it thanks for all the color.
Okay.
Next we'll go to Kevin Barker with Piper Sandler Your line is open.
Thank you so with these new programs, particularly bypass surplus and you also get the inflation plus or come out.
Late last year.
Yes.
It requires.
And buyers to be motivated either buy.
Our relationship and trust or some type of monetary incentives now, obviously inflation busser antibody plus seem like they provide that monetary incentives.
But could you describe your expectations for why you think these are going to be successful in driving more purchase volume.
And if youre going to be able to make up some of the monetary.
Hartley Subsidizing Malone.
On the other side via either higher margins or potentially higher revenue down the road by refinancing.
These newer customers. Thank you.
Yes. Good good question here I think Brian touched on the fact that margins.
We're good in Q1, and we feel good about the revenue number we are projecting in Q2.
We're in a very fortunate place that through our bypass and sell plus not only do we have rocket mortgage we've got rocket homes.
Got it.
Title company, and so our ability to capture revenue through multiple areas of the transaction differs from our competitors and so even if and in this case you pointed out we're providing a incentive to clients to move forward.
That by plus program and sell plus program allows us to capture broader revenue across the entire transaction.
And I think there are three elements, if youre going to grow purchase right now.
Element number one is certainly you've got a a message that resonates with buyers. That's why we're out on the Airways.
Our marketing team has done a great job of putting out that message. So people are aware that we are here as a purchase lender number two.
<unk> got to deliver a great client experience, we just touched on those NPS scores that were delivering.
<unk> got to have an offer that's compelling and right now when you talk to clients as rates have moved up their watching their buying power shrink.
Nothing is more making you more aware of that then we're cutting a check at the closing table and so we're offering significant dollars back for our clients thousands and thousands of dollars back it's meaningful it's getting their attention and so once you have that type of message.
My firm belief is that you will cut through Youll have awareness youll have engagement and now the only question is how do you stay engaged with that client till they find the home because of the inventory levels a bit low we've got to keep that relationship going for 3456 months, who knows that's why we've made the investment in our home buying plan.
In the credit card in the rewards program. These are critical tools that allow us once we.
Had that client join our funnel allow us to have a right to keep interacting with that client until it's time to convert and so.
Seeing all of these elements come together is I think what gives us great confidence that we can be a very strong purchase lender here in the United States of America.
Okay, and then just a follow up on the expense guide I realize you have marketing spend and then higher volumes.
How much of the <unk>.
Operating expense would you consider maybe transitory in nature due to investments that youre, making.
Relative to what your core run rate would typically be.
Given all the expense cuts that you've made over the last year.
Seem that you probably would continue to see a drift lower particularly in the back half of the year.
After.
Unveiling some of these marketing spending that you are could you talk about.
Yes, I think so Kevin here, Here's how I think about it first of all just because you mentioned it we took $3 billion out of the cost structure last year that was over 40% of the total cost. So it was not the fund work to do but it was the important work to do and you can clearly see that setting us up for success. This year the north star.
That we use to guide us on that front or revenue share growth and profitability, it's that simple and to break it down further how I think about it in terms of two categories. One is capacity.
Clearly stay very close to the capacity very close to the loan production and the good news is that's cooperating right now so that makes us feel good about the expense side of the house on that side and then of course, the other which you mentioned is the investment side here's the good news on that a lot of these products are launched now so we're getting real data in real data.
Information before it has a lot of monitoring cost side, and making sure we launch things on time and sticking to our milestones now we're actually getting to evaluate the return on those investments and the returns have been better than we expected in most cases, but to the extent they are not well reprioritising will reallocate those resources and to the extent that.
That doesn't work, we'll keep a close eye on them and we'll make changes if needed.
The other thing I'll add is a lot of folks will talk about the dollars.
Vested in technology chain changing experience those sorts of things.
What I'm most proud of the team is actual execution delivery, we've talked about the fact that we're going to do these things and here. We are again 789 months later in their roles are out the door our clients are experiencing them and so as Brian talked about investments, we're making I think it is important to be able to tie that to actual delivery of product that's out in the wild.
Yes, Jay the only other thing I would add to that is it I mean anybody who is on the business knows rolling something out as step one by vendors the constant monitoring following up tweaking and those resources necessary to make sure that you refine it. So that is giving you exactly what you wanted to get and we have a lot of work still to go there.
Thank you very much.
Okay next we'll go to Derek Chalmers with Jefferies. Your line is open.
Hey, good evening, everyone could you talk about what investments and <unk>.
Initiatives you have planned for the rest of the 23, both for the core mortgage business and.
The rocket reward side of the house I know you mentioned the marketing campaign, but could.
Could you go into a little bit more detail are.
Shed some light on other initiatives.
I think as Bill just touched on step one was rolling all of these initiatives out step two is the integration of these initiatives in all of the appropriate places understanding where we have to provide additional support marketing.
As we as we built quicken loans and then rocket over many many years once you get something out there. There are so many different adjustments you can make tweaking of the dials changing of the messaging and we're just in the early stages of that so it'll be a lot of effort.
Pointed towards that and bill can touch on this as well, but we're always making investments in all the operations of the business occurs from our bankers and how they work with our clients as you rollout new products for the clients that's got to get integrated into the banker process. So.
To really see success at a full level its a full integration from banking to operations to capital markets learn rinse repeat and so I think that's where you'll see a lot of our efforts as we continue forward in the year, Yes, I think thats right, Jay and Thats, just the reality of how things work, but we are constantly working on our internal.
Platform systems, and some of our mortgage operation technology to make that more effective theres still lots of work that can be done to cut cycle time out of transactions.
And so we continue to work on stuff, we always have stuff in the queue that we're thinking about.
But the reality of life is some of that is still being baked. So we're excited about where we are what we've rolled out the initial indications.
We're always thinking about what's next and what's new.
Got it thank you.
Next we'll go to Richard Shane with JP Morgan Your line is open.
Hey, guys. Thanks for taking my question and Bill Congratulations Jay.
I hope you missed us as much as we're going to Miss you, but I suspect you probably won't.
Thank you for that I will Miss you guys how those funds.
Okay. Thank you.
Look one of the things that I wouldnt serve as it looks like the drag from repurchases from loan repurchases seems to be abating as you sort of anniversary the larger volumes should we assume that there is a convergence between the state of gain on sale margin revenue.
And the actual revenue.
As we move through 2023.
Yes.
Take a shot at it I think.
We saw the biggest difference there in Q4 and that was really due to the rate environment. The number one thing that we fair value those repurchased assets on our balance sheet and the.
The note rate or the 10 year treasury rate at the end of that period goes into that fair value assumptions. So for us anything that ran through there was not because of necessarily an increase in the number of loans or repurchasing just a fair value adjustment at the end of the period. So.
I don't have a crystal ball and I can't predict where rates will be at any particular time of course, but what I do know is the volume of repurchases is still at a very very low level and something we're very comfortable with.
Got it Okay. That's helpful and then just one.
Housekeeping thing I didn't see it in the press release and we're waiting for the supplement.
What was the UCB on the servicing book at the end of the quarter.
550 billion ish.
Rick I think it's been one of the bullets towards the end of the earnings release.
Okay terrific. Thank you.
Okay.
Okay.
Okay next we'll go to James Faucette with Morgan Stanley .
Thanks. This is sandeep <unk> on for James I want to quickly touch on capital position.
How youre thinking about the balance sheet, but more specifically opportunities to deploy excess capital.
Strategic M&A bolt on acquisitions anything in the pipeline that is particularly exciting.
Yes, so starting with your question on the balance sheet.
Very strong credit profile very robust balance sheet worth, noting at least from a rating agency perspective, two to four notches above where anyone else in the mortgage space is rated from a liquidity position very solid over $8 billion of liquidity in the organization, which includes over $3 billion of cash so well.
Capitalized and definitely puts us in a position to be opportunistic there is no doubt about that in terms of the M&A front look in the mortgage space. There is no shortage of inbounds, but the same thing. We've said here many times, we'd have to ask ourselves what would we be buying.
On the positive side valuations have come down, but we're not interested in buying loan officers or shelves with loan officers in it thats not interesting to us.
We could take a look at the technology, but in almost all cases, we find out that our technology is much more advanced than what we'd be buying some things that could be interesting could be MSR portfolios and we're active in that space, we're not necessarily willing to pay any type of premium just through an M&A transaction rather than just buying in the open market.
But the balance sheet and capital position of this company allows us to be opportunistic I think what Brian points out is an important when youre thinking about purchasing an MSR you've got to think about your cost to originated and Thats. What we spent the bulk of this phone call talking about over the course of many many years we became experts.
At producing a refinance transaction at a cost that was always more advantageous almost all cases and buying an MSR now you've heard us talk about that same investment in generating a purchase transaction.
Whether it's four five or $5 million purchase transactions out there.
Very few have found a way to market to consumers to drive that business and so if you think about where you might put your dollars as you keep cracking that code and you start seeing wins much like I think we saw with refinance over the years.
A strong place we will look is leveraging those wins that we find and being able to generate our own growing msr's through through the origination of purchase transactions that's right.
Perfect. Thank you that's Super helpful. And then I'll just ask one follow up on capacity interested in where you think the industry stands today. So obviously working through what inning we're in.
Head count of course, but general capacity, as well and where rocket fits within that.
Framework in perspective.
Yes, I'll take a first shot and then bill might have comments too, but look we're all reading the headlines capacity is coming out of the system. There is no doubt about that I look at it in a couple of different buckets. One is the banks of course.
<unk> are absolutely exiting the space either to trying to slow down or getting out completely there is no doubt about that when it comes to the retail lenders. The few direct to consumer lenders that are left in this space. They have a cost of acquisition problem right now, it's very expensive to acquire a purchase transaction, especially if youre doing it.
Right at the time the clients on the property, which is why it's so important of all the things we launched building relationship with the client much earlier in the clients' lifecycle and keeping them here and keeping them incubated and then the third bucket is brokers of course and for the brokers that have been in business a while for the brokers that have a book.
A business that have a strong local presence that have done purchase business before they'll be fine there'll be great through this cycle and they'll be very successful, but for the brokers that may have entered the space more recently and had focused on refinance transactions, which didn't necessarily require relationships with <unk>.
<unk> a big presence in the local community I think they will struggle. So from my perspective capacities coming out, albeit maybe not as fast as we'd like it to particularly on the loan officer front, but gain on sale margins are a good indication of.
Capacity and they've been going up in the guide for Q2 says that we would expect them to go up as well.
Perfect. Thank you.
Okay.
Next we'll go to Doug Harter with credit Suisse. Your line is open.
Yes.
Thanks sticking on the topic of kind of customer acquisition costs. When you think about the credit card are you thinking about that as kind of generating new leads for the top of the funnel or are you thinking about that more.
Kind of keeping the existing customers engaged.
Yeah, it's both and.
I'm glad you brought that up because and Brian talks about this a lot when you look at the traditional cost to acquire a client in the mortgage space Youre going to see thousands of dollars at this point in time per closed loan.
When you think about what our cost to acquire someone's where rocket money or the credit card is it's far less so it gives our marketing group.
At much wider opportunity to reach a broader audience at lower cost now that credit card does two things. If you are a first time homebuyer. It allows us to bring those clients in they can build credit towards the closing of their mortgage reduce the expenses et cetera, but it also allows people in our servicing book to benefit from using the credit card. So.
We kind of think of it as a as a mechanism to.
Acquire new client new client.
To incubate our lead flow and keep existing clients that are already in our book.
Alright, Thank you Jeff.
Okay and next we'll go to Don <unk> with Wells Fargo. Your line is open.
Hi, good evening.
It looks like you've got some pretty good momentum with your client engagement programs can you talk about how youre thinking about market share going forward.
I know that we don't.
Typically specify specific market share I can tell you the important thing thats happening.
Inside of our organization is thinking about it separately by product and to ensure that we are.
Building ways to increase that market share and you've heard us talk a lot about purchased both first time homebuyers and repeat buyers and so that's that's kind of our focus not getting caught in the broader market share, but in the areas, where we're dialing in do we see a path to grow that market share, yes, I think thats right Jay.
To me, it's about growing the market has shifted from heavy refinance the heavy purchase so that's going to affect the overall market share Matt that's a mathematical problem.
But where we focus is ensuring that we're growing purchase market share and ensuring that we're growing refinance market share individually and we believe that's happening when we think about how we measure market share internally, we look at a couple of different metrics. We of course take the industry forecast.
<unk> in the Fannie and Freddie, but as we all know the difficulty with that is not only do they have different forecast they have different actual numbers too which makes it hard to be very precise there, but we also look at the MBA application index and securitization data is a great way to get at market share too. It doesn't necessarily include all the.
Mortgages, because banks will balance sheet loans, but it does include most of the mortgages and when we look at those three data points. We believe we're gaining market share both in purchase and refinance individually.
Thank you.
Next we'll go to Kevin <unk> with Zelman and Associates. Your line is open.
Yes.
Hey, guys. This is Kevin on for Ryan.
Can you talk about how your purchase volumes breakdown between new home sales and existing home sales and how your market share within the new home portion has been trending recently and how might look going forward and I ask because with the low inventory and people locked into lower rates the new home.
Market in some ways gets around some of that so that's why we're asking.
Yes, it's growing in bulk.
It's not there's not probably a noteworthy difference in either but I think you do make a good point I mean, when we when we studied the inventory levels and I am sure. Many of you have read the homebuilder reports recently theyre doing well because of the low levels of existing inventories. So thats pushing people more towards the new builds and to your point that can be.
A very helpful thing for us. So it is something that we focus on there is not a big difference in bolt, but the outperformance has been driven by I would say all purchase categories at this point it's.
It's always encouraging when we built the rocket experienced years ago. It was for first time homebuyers, who wanted to be able to control this transaction and do it anytime of the day or night on their phone. If you think about that experience. If you think about our buy plus if you think about the credit card all of these things in.
Engage or allow us to engage a first time homebuyer, which is important in a market like this because individuals who purchased some last few years are probably sitting in a situation, which is a little harder to move up and so someone who leads and first time homebuyer I think we will have an advantage in continuing to grow their purchase their purchase.
Market share Thats right, Jay first time, homebuyers, and exchanging a 3% no rate for a 6% note rates so they're definitely a distinct advantage there.
Okay.
Alright.
Understood.
As a follow up.
We saw the press release, you guys put out at the start of the kind of the banking turmoil, but can you give us an update on incremental impacts you've seen so far regarding things like credit availability to borrowers mortgage rate spreads gain on sale margins emerging market opportunities or any other notable areas.
Yes, I mean, the first thing that still holds true from when we put out. The 8-K is we don't have any direct exposure to any of the banks that failed.
Or really any regional banks most of our banking partners our global the big banks that you would of course recognize the brand names. So that's the first thing. The second thing is no. We haven't seen much impact at all one of the things. We're watching closely is due to the banking crisis banks were already hesitant to be.
In the mortgage space and already pulling back from the mortgage space. So this is something we view more as an opportunity in terms of banks not participating in mortgage as much and potentially giving us an opportunity to take share.
And how does it impact the mortgage as a service offering and how you think about that going forward.
Well like we said mortgages of service as a service for banks to help.
Banks get the cost structure of a mortgage and provide J D power winning level experience to these banks to keep them in the game, but let us do the work for them and it turns out to great unit economics, both for us and them. So the way I look at it is it should only increase that opportunity.
Alright, Thank you for taking my question.
Okay.
That does conclude today's question and answer session I'll turn the call back over to our presenters for any additional or closing remarks.
Thank you everybody, it's Jay Farner here I appreciate you joining the call and I was asking great questions.
As this is my last call I want to make sure I think Dan Gilbert.
All of our team members our clients our shareholders. This has been an amazing experience for me the last 27 years and it's because of everybody's passion support excitement for what we're doing here at the company and the city of Detroit and other places across the country and as Dan always says I firmly believe the best tier at rocket as yet.
To come and we'll sign off have a good day.
This concludes today's conference call you may now disconnect.
Okay.
Yeah.
Okay.
Yeah.