Lower rates are good for Rocket Companies, BofA analysts say

Investing.com -- Bank of America upgraded Rocket Companies Inc to Buy from Neutral, saying lower interest rates and pending deal synergies should boost the mortgage lender’s earnings.

The brokerage raised its price objective to $24 from $21.

“Don’t overthink it – lower rates are good for Rocket,” analysts wrote. The company’s roughly 10% market share in refinancing makes it a strong beneficiary of a decline in mortgage rates.

BofA now expects two Federal Reserve rate cuts this year and three more in 2026, a shift that should help unlock refinancing volumes.

Mortgage rates have already eased to 6.55%, their lowest since February 2023.

BofA said refinancing applications spiked when rates dipped into the 6.6% to 6.7% range in June, and Rocket itself pointed to stronger refi activity in the second quarter.

“We think RKT would see an even more meaningful uplift to volumes as mortgage rates drift lower,” analysts said.

BofA raised its 2026 earnings forecast for Rocket by 11% to $1.02 a share, citing a 5% larger mortgage market under lower rate assumptions.

The bank also flagged Rocket’s pending $12 billion acquisition of Mr. Cooper as a potential catalyst. Rocket has outlined $500 million in cost and revenue synergies from the deal, with upside possible as 22% of Mr. Cooper’s servicing book carries rates above 6%, creating refinancing opportunities.

A separate $200 million synergy target from the recently closed Redfin acquisition is also on track, BofA said.

“We think there could be a positive revision cycle as mortgage market size estimates are revised higher,” the analysts wrote.

Key risks include mortgage rates staying elevated, which would limit refinancing volumes and weigh on Rocket’s growth.

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