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Last year was a banner season for the IPO market in general and public offerings for mortgage companies in particular. Between July and December, eight of the 30 largest U.S. mortgage lenders announced plans to go public. It hasn’t worked out quite the way all the companies were hoping.
The amount lenders earn when they sell each loan has also started to drop. The median gain-on-sale margin for mortgage banks and nonbank lenders dropped from 2.74% in the third quarter to 2.14% in the fourth quarter, according to Piper Sandler Cos. Analysts expect per-share earnings to fall in 2021 at Home Point, Guild Holdings Co. GHLD 0.62% and Rocket RKT 9.80% Cos. When Home Point and loanDepot listed this year, investors were willing to buy fewer shares—and paid less for them—than the lenders had anticipated.
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