How to make mortgages sexy... Thinking, thinking.... Include some space-travel imagery. Rocket Companies (formerly less-sexy Quicken Loans) is the largest mortgage lender in the US. Back in 2010, Cleveland Cavs owner Dan Gilbert chose downtown Detroit for Quicken's HQ. That kinda catalyzed a renaissance for the Motor City because Quicken brought some fast-paced business growth with it. Now:
- Rocket Cos just filed to go public: The target valuation hasn't been announced, but it's likely in the tens of billions of dollars, according to #PFWTM (people familiar with the matter).
- Rocket Mortgage, the flagship biz, has doled out over $1 Trillion in home loans. Last quarter, sales more than doubled from a year ago — Now it controls 9% of the mortgage market.
How to make mortgages sexy (part 2)... There's an app for that. The Rocket Mortgage app was so popular, that Quicken decided to rebrand itself to Rocket. Kind of like the TurboTax of mortgages, Rocket's calculators hand-hold your way into seeing what home ownership means for your wallet. You can see how the digital-first focus is working with its target:
- 75% of Rocket users are 1st-time homebuyers, encouraged by low interest rates right now.
- But the risk facing Rocket (and the whole mortgage industry) is how home sales could change dramatically in a longer recession.
Local mortgage providers have big competition... Historically, getting a mortgage required meeting a guy/gal at a local bank in town. But in-person transactions have declined with the rise of financial software — and this decline is accelerating quickly in the corona-conomy. Rocket's app-based approach helps it lower costs and scale quickly, which is why it processed 3X as many mortgages monthly as a typical lender.