Not only did rock bottom interest rates during the pandemic spur a refinancing bonanza, but with the help of remote work and tight inventory, they also heated up the housing market in a way that hadn't been seen since the bubble. Borrowers simply couldn't pass up on 30-year fixed mortgages with a rate of 3%—or in some cases 2%. Few companies, of course, benefited more from that housing boom than Rocket Companies, which during the roughest part of the lockdowns did $5 billion in sales in the second quarter of 2020 compared to $1.6 billion in the same quarter in 2019.
That's behind us now: The mortgage rate shock created by the Federal Reserve's rate hiking campaign has set off a housing market recession. While national home prices remain fairly stable, housing activity hasn't been so lucky. Residential fixed investment, otherwise known as housing GDP, has fallen for four straight quarters, while mortgage refinance applications and mortgage purchase applications are down 45% and 31%, respectively, on a year-over-year basis.
