Rocket posts $709M profit in Q3 despite tougher mortgage market

Rocket Companies on Thursday reported a third-quarter profit of $709 million, reversing a loss from a year ago as the Detroit-based mortgage lender expanded revenue and gained market share in purchase and refinance lending.

The company reported net income of $709 million for the three months ended Sept. 30, compared with a net loss of $124 million a year earlier and a second-quarter 2026 net income of $229 million. Net total revenue nearly doubled year over year to $3.28 billion, up from $1.7 billion, while adjusted revenue rose to $2.57 billion, up from $1.87 billion.

Adjusted net income fell to $419 million from $441 million in Q2 2026, and adjusted EBITDA declined to $748 million from Q2’s $766 million. Mortgage production also slowed, with closed origination volume falling to $43.6 billion, down from $49.1 billion.

The sequential decline in adjusted earnings came as mortgage production slowed from the second quarter, even as the company reported a slightly higher gain-on-sale margin.

Rocket chief financial officer Brian Brown anticipated the slowdown during the company’s Q2 2026 earnings call, saying he expected Q3 to be “smaller than the second,” a contraction not seen in the industry since 2022. He cited rates above 6.8% and rising inflation expectations as key challenges.

“Rocket gained market share in both purchase and refinance, quarter over quarter and year over year, and delivered our highest profitability margin in nearly five years, even as mortgage rates climbed to a three-year high,” CEO Varun Krishna said in a statement. “We didn’t spend the last three years waiting for rates to fall. We acquired distribution, connected real estate and mortgage, and invested heavily in technology. We changed the economics of our business. Rates went up. We took share. Profits grew. That’s not a coincidence.”

During the company’s earnings call on Thursday afternoon, Krishna addressed the broader market. “Here’s the truth about tough markets: They don’t lie,” he said. “They strip everything down to what’s real. Who has the capital to keep investing? Whose model works in any cycle? Who can win their clients back? And who can move fast when it counts? This quarter did all of this.”

Brown said during the call that the company estimates its purchase market share approached 6.5% in Q3 2026, up from 6.2% in Q2 2026. Its refinance share reached 15.5%, compared with 14.3% from April through June.

Mortgage production and servicing

Rocket closed $43.6 billion in mortgage originations in the third quarter, down from $49.1 billion in Q2. Net rate-lock volume fell to $40.4 billion from $47 billion over the same period. The company’s total gain-on-sale margin edged up to 2.54% from 2.48% in Q2.

Excluding correspondent lending, Rocket closed $33.5 billion in mortgage volume during the third quarter. Direct-to-consumer lending accounted for $24.6 billion, while wholesale channel Rocket Pro generated $9 billion. The correspondent channel contributed $10.1 billion in closed volume.

Rocket’s mortgage servicing portfolio remained steady at about $2 trillion in unpaid principal balance across 9.1 million loans.

The company sold mortgage servicing rights tied to $23 billion in unpaid principal balance during Q3, generating $379 million in proceeds. That was down from $53 billion in MSR sales and $795 million in proceeds in Q2. Rocket retained subservicing and recapture services on nearly 70% of the servicing rights sold in the third quarter, compared with nearly 80% in Q2.

Total liquidity rose to $11.4 billion at the end of Q3, up from $11.2 billion at the end of the prior quarter. The figure includes $2.7 billion in cash, $2.5 billion in undrawn credit lines and $6.2 billion in available servicing-rights and advance lines.

Rocket said its combined servicing portfolio following the Mr. Cooper integration continued to support borrower recapture, with the company reaching its highest recapture levels to date.

During Q3, Rocket continued to expand its use of artificial intelligence and its partnerships with real estate companies. The company said it pulled credit on nearly 20% of its direct-to-consumer loan volume before borrowers spoke with a loan officer, compared with none a year earlier. Digital mortgage applications accounted for more than 40% of retail refinance applications, and digital leads converted at four times the rate of nondigital leads.

AI voice technology handled 65% of inbound servicing calls, resolving more than half without human assistance.

Rocket also reported growth in its real estate partnerships. Redfin visitors who clicked to begin a mortgage transaction increased 50% year over year, while Redfin’s contribution to Rocket’s refinance leads more than doubled in Q3. Listings tied to its Compass partnership reached nearly 40,000, up from about 25,000 in Q2.

In September, Rocket Mortgage adopted VantageScore 4.0 as its preferred credit scoring model for eligible loans. The company said its testing indicated qualifying borrowers could save an average of $1,600 in closing costs.

Rocket Pro launched Orbit in October, offering eligible purchase borrowers same-day conditional approval and a 12-business-day timeline to clear-to-close. The company also extended a Compass pricing credit through the end of 2026. The partnership had generated more than $3 billion in rate locks since February.

Outlook for Q4 2026

Rocket expects adjusted revenue of $2.1 billion to $2.3 billion in Q4, below the $2.5 billion to $2.7 billion range it projected for Q3 in its previous earnings report.

Brown said that the company expects the market to weaken further as mortgage rates remain elevated and seasonal trends reduce activity. The company estimated purchase mortgage applications were down nearly 20% year over year, while refinance applications had fallen more than 50%.

Krishna said Rocket’s real-time data pointed to a fou

Source: www.housingwire.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.