2 Stocks to Watch From Thriving Mortgage & Related Services Industry

The mortgage and related services industry is experiencing a boost in purchase originations and refinancing volumes, driven by declining mortgage rates, now near 6%, and anticipated Federal Reserve rate cuts. However, intense competition is pressuring sales margins for servicers. Despite the industry's underperformance against the broader market and a less favorable Zacks Industry Rank, companies like Rocket Companies (RKT), which expanded through the Mr. Cooper Group acquisition and platform integration, and LendingTree (TREE), diversifying into non-mortgage products, are positioned to capitalize on these dynamics, with both forecasting robust revenue and earnings growth for 2025.

Analysis

The mortgage and related services industry is experiencing a resurgence, driven by declining mortgage rates, now near 6% from over 7%, and anticipated Federal Reserve rate cuts in late 2025. This fosters increased purchase originations and refinancing activities, easing operational pressures and improving gain-on-sale margins. However, intensified competition compels servicers to engage in price-cutting, reducing sales margins despite market expansion.

Despite these tailwinds, the Zacks Mortgage & Related Services industry has underperformed both the broader Zacks Finance sector (15.9% vs. 16.7%) and the S&P 500 (15.9% vs. 20.5%) over the past year. The industry trades at a price-to-book (P/B) ratio of 6.58x, a premium to the Zacks Finance sector's 4.27x, suggesting a relatively higher valuation within its sector despite "drab near-term prospects" per its Zacks Industry Rank #95.

Rocket Companies (RKT) is strategically positioned, having acquired Mr. Cooper Group in October 2025 and launched Rocket.com in January 2025 to integrate its homeownership platform. Analysts project RKT's 2025 earnings to rise 8.7% and revenues to grow 16.6%, supported by a Zacks Rank #2 (Buy).

LendingTree (TREE) shows resilience, focusing on improving purchase conversion rates and diversifying offerings beyond mortgages into credit cards, personal, auto, and student loans. TREE's diversification is expected to yield significant growth, with 2025 earnings projected to increase by 36.9% and revenues by 14.9%, holding a Zacks Rank #3 (Hold).

Key Decisions for Investors

• Monitor the trajectory of mortgage rates and Federal Reserve policy for sustained industry tailwinds in origination and refinancing volumes.
• Consider Rocket Companies (RKT) for exposure to a leading, integrated fintech platform with strong projected earnings and revenue growth, especially given its strategic acquisitions.
• Evaluate LendingTree (TREE) for its robust diversification strategy into non-mortgage products and significant earnings growth forecast, which could mitigate mortgage market volatility.
• Be mindful of the industry's P/B valuation premium relative to the broader finance sector and the competitive pressures that could impact sales margins.