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3 Stocks to Watch From Thriving Mortgage & Related Services Industry
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The Zacks Mortgage & Related Services industry is gaining momentum with declining mortgage rates. The Federal Reserve lowered interest rates three times in 2025 and a more easing expected this year. This will indirectly put more downward pressure on mortgage rates, thus leading to improving trends in purchase originations and refinancing volumes.
With rising competition, mortgage servicers are likely to be under pressure as they are required to resort to price-cutting, leading to a reduction in sales margin. Hence, industry players like PennyMac Financial Services, Inc. (PFSI - Free Report) , LendingTree, Inc. (TREE - Free Report) and Federal Agricultural Mortgage (AGM - Free Report) are well poised to navigate the challenges.
Industry Description
The Zacks Mortgage & Related Services industry comprises providers of mortgage-related loans, refinancing and other loan-servicing facilities. Numerous banks have been retreating from the mortgage business due to higher compliance and capital requirements. This allowed non-banks to increase their capacity to gain market share in the mortgage loans business, which accounts for the largest class of U.S. consumer debt. Players in the industry are dependent on the interest rates determined by the Federal Reserve, as prevailing rates influence customers' decisions to apply for mortgages. The companies also generate investment income from several financial assets, such as residential or commercial mortgage-backed securities and asset-backed securities. The firms make equity investments in mortgage-related entities, among others.
3 Mortgage & Related Services Industry Trends to Watch
Lower Rates to Aid Originations: The housing market is witnessing a rising trend as the 30-year fixed mortgage rate is declining, offering a welcome signal of relief for prospective homebuyers. Though mortgage rates remained stubbornly high near 7% throughout much of the first half of 2025, they drifted lower and stabilized around a low-6% range since mid-September 2025, driven by the Fed’s monetary policy easing. Further, recently, President Donald Trump announced a plan, directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities. The strategy is aimed at increasing demand for these bonds, lowering yields, and thereby lowering mortgage rates.
The combination of solid economic growth and continued retreat in mortgage rates, alongside moderating home price appreciation, is leading to an improvement in purchase demand. With this turnaround, mortgage originations will likely witness a positive trend. This will reduce operational and financial challenges for originators, stimulate new investment activity, and drive improvement in book value.
Refinancing Activities Witnessing Improving Trend: Refinancing activity in the U.S. mortgage market is showing a notable recovery, supported by the rate cuts. Hence, existing homeowners who locked in mortgages at higher rates during the rate-hike cycle are increasingly finding opportunities to refinance into lower-rate loans. Increased refinancing activity is expected to drive higher loan origination volumes, improve fee income and support top-line growth for industry players. Additionally, improved borrower sentiment and greater rate stability could sustain refinancing momentum into the near to medium term, further strengthening earnings visibility across the mortgage service providers.
Competition Picking Up: Per an MBA forecast, U.S. single-family mortgage debt outstanding is expected to see an increasing trend in the upcoming years. This is anticipated to be primarily driven by house price appreciation. While this typically results in growth of the single-family mortgage portfolio for industry players, the competitive landscape of the mortgage services industry is likely to be a deterrent. Numerous companies have hinted at significant declines in gain-on-sale margins across the space. With tighter margins
Zacks Industry Rank Reflects Bright Prospects
The Zacks Mortgage & Related Services industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #104, which places it in the top 43% of more than 244 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a couple of stocks you may want to consider for your portfolio, let us look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector & the S&P 500
The Zacks Mortgage & Related Services industry has outperformed the broader Zacks Finance sector and the S&P 500 composite in the past year.
The industry has gained 54.7% in this period compared with the broader sector's growth of 23.2% and the S&P 500 composite’s rise of 23.4%.
Price Performance
Industry's Current Valuation
On the basis of the price-to-book ratio (P/B), which is commonly used for valuing mortgage and related services companies, the industry currently trades at 6.27X compared with the S&P 500's 8.67X. Over the last five years, the industry traded as high as 13.28X, as low as 2.04X and at the median of 4.25X.
Price-to-Book TTM
As finance stocks typically have a lower P/B ratio, comparing mortgage and related services companies with the S&P 500 may not make sense to many investors. However, comparing the group's P/B ratio with that of its broader sector ensures that the group is trading at a premium. The Zacks Finance sector's trailing 12-month P/B of 4.36X for the same period is below the Zacks Mortgage & Related Services industry's ratio, as the chart shows below.
Price-to-Book TTM
3 Mortgage & Related Services Stocks to Watch
PennyMac: The company is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the origination and servicing of mortgage loans, along with the management of investments related to the U.S. mortgage market. The company’s top line is benefiting from continued strength in its servicing business and a solid contribution from the production segment. PennyMac’s efficient and low-cost operating platform and strong capital levels are other tailwinds. Recently, PennyMac announced a strategic transaction with Annaly Capital Management, which involved the sale of low-interest-rate mortgage servicing rights (MSRs). The growing servicing portfolio and industry-leading cost structure, amplified by operational excellence and technology leadership, are delivering tangible efficiency and performance gains.
The Zacks Consensus Estimate for PFSI’s 2025 earnings is $11.71 per share, indicating a 1.7% rise from the year-ago period’s reported levels. PFSI currently has a Zacks Rank #3 (Hold) and a market capitalization of $7.6 billion.
Price and Consensus: PFSI
Federal Agricultural Mortgage: The company, also known as Farmer Mac, is a federally chartered corporation that combines private capital and public sponsorship to create a secondary market for various loans made to rural borrowers. Farmer Mac’s strategic diversification across Farm & Ranch, Corporate AgFinance, and Infrastructure Finance, including key growth areas like renewable energy and broadband, positions it to navigate market volatility while capturing long-term opportunities in rural America. This multi-segment approach balances risks and growth potential. In December 2025, AGM completed a $313.5-million securitization of agricultural mortgage loans. This transaction reflects the strength of the company’s portfolio, as agricultural assets continue to generate significant institutional investor demand despite the volatile macroeconomic climate.
The Zacks Consensus Estimate for AGM’s 2025 earnings is pegged at $17.53 per share, indicating a 12.1% rise from the year-ago period’s reported level. Farmer Mac currently has a Zacks Rank #2 and a market capitalization of $1.9 billion.
Price and Consensus: AGM
LendingTree: This parent company of LendingTree, LLC, is headquartered in Charlotte, NC, and has been operating solely in the United States since July 1998. Its online marketplace provides clients with access to product offerings from more than 600 partners.
LendingTree is focusing on improving purchase conversion rates while assisting in meeting its customers’ demands for home equity loans. The company’s market-leading position and flexible business model provide further diversified solutions for a wider array of lenders, enabling it to navigate through fluctuating macroeconomic situations.
TREE is committed to boosting revenues by diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has increased its services, such as credit cards, and widened loan offerings to personal, auto, small business and student loans. With the launch of the LendingTree WinCard in partnership and an Upgrade in 2023, the company provided its first branded consumer credit offering.
The Zacks Consensus Estimate for TREE’s 2025 earnings is pegged at $4.79 per share, indicating a 50.2% rise from the year-ago period’s reported level. TREE currently has a Zacks Rank #3 and a market capitalization of $860 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TREE
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3 Stocks to Watch From Thriving Mortgage & Related Services Industry
The Zacks Mortgage & Related Services industry is gaining momentum with declining mortgage rates. The Federal Reserve lowered interest rates three times in 2025 and a more easing expected this year. This will indirectly put more downward pressure on mortgage rates, thus leading to improving trends in purchase originations and refinancing volumes.
With rising competition, mortgage servicers are likely to be under pressure as they are required to resort to price-cutting, leading to a reduction in sales margin. Hence, industry players like PennyMac Financial Services, Inc. (PFSI - Free Report) , LendingTree, Inc. (TREE - Free Report) and Federal Agricultural Mortgage (AGM - Free Report) are well poised to navigate the challenges.
Industry Description
The Zacks Mortgage & Related Services industry comprises providers of mortgage-related loans, refinancing and other loan-servicing facilities. Numerous banks have been retreating from the mortgage business due to higher compliance and capital requirements. This allowed non-banks to increase their capacity to gain market share in the mortgage loans business, which accounts for the largest class of U.S. consumer debt. Players in the industry are dependent on the interest rates determined by the Federal Reserve, as prevailing rates influence customers' decisions to apply for mortgages. The companies also generate investment income from several financial assets, such as residential or commercial mortgage-backed securities and asset-backed securities. The firms make equity investments in mortgage-related entities, among others.
3 Mortgage & Related Services Industry Trends to Watch
Lower Rates to Aid Originations: The housing market is witnessing a rising trend as the 30-year fixed mortgage rate is declining, offering a welcome signal of relief for prospective homebuyers. Though mortgage rates remained stubbornly high near 7% throughout much of the first half of 2025, they drifted lower and stabilized around a low-6% range since mid-September 2025, driven by the Fed’s monetary policy easing. Further, recently, President Donald Trump announced a plan, directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities. The strategy is aimed at increasing demand for these bonds, lowering yields, and thereby lowering mortgage rates.
The combination of solid economic growth and continued retreat in mortgage rates, alongside moderating home price appreciation, is leading to an improvement in purchase demand. With this turnaround, mortgage originations will likely witness a positive trend. This will reduce operational and financial challenges for originators, stimulate new investment activity, and drive improvement in book value.
Refinancing Activities Witnessing Improving Trend: Refinancing activity in the U.S. mortgage market is showing a notable recovery, supported by the rate cuts. Hence, existing homeowners who locked in mortgages at higher rates during the rate-hike cycle are increasingly finding opportunities to refinance into lower-rate loans. Increased refinancing activity is expected to drive higher loan origination volumes, improve fee income and support top-line growth for industry players. Additionally, improved borrower sentiment and greater rate stability could sustain refinancing momentum into the near to medium term, further strengthening earnings visibility across the mortgage service providers.
Competition Picking Up: Per an MBA forecast, U.S. single-family mortgage debt outstanding is expected to see an increasing trend in the upcoming years. This is anticipated to be primarily driven by house price appreciation. While this typically results in growth of the single-family mortgage portfolio for industry players, the competitive landscape of the mortgage services industry is likely to be a deterrent. Numerous companies have hinted at significant declines in gain-on-sale margins across the space. With tighter margins
Zacks Industry Rank Reflects Bright Prospects
The Zacks Mortgage & Related Services industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #104, which places it in the top 43% of more than 244 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a couple of stocks you may want to consider for your portfolio, let us look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms Sector & the S&P 500
The Zacks Mortgage & Related Services industry has outperformed the broader Zacks Finance sector and the S&P 500 composite in the past year.
The industry has gained 54.7% in this period compared with the broader sector's growth of 23.2% and the S&P 500 composite’s rise of 23.4%.
Price Performance
Industry's Current Valuation
On the basis of the price-to-book ratio (P/B), which is commonly used for valuing mortgage and related services companies, the industry currently trades at 6.27X compared with the S&P 500's 8.67X. Over the last five years, the industry traded as high as 13.28X, as low as 2.04X and at the median of 4.25X.
Price-to-Book TTM
As finance stocks typically have a lower P/B ratio, comparing mortgage and related services companies with the S&P 500 may not make sense to many investors. However, comparing the group's P/B ratio with that of its broader sector ensures that the group is trading at a premium. The Zacks Finance sector's trailing 12-month P/B of 4.36X for the same period is below the Zacks Mortgage & Related Services industry's ratio, as the chart shows below.
Price-to-Book TTM
3 Mortgage & Related Services Stocks to Watch
PennyMac: The company is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the origination and servicing of mortgage loans, along with the management of investments related to the U.S. mortgage market. The company’s top line is benefiting from continued strength in its servicing business and a solid contribution from the production segment. PennyMac’s efficient and low-cost operating platform and strong capital levels are other tailwinds. Recently, PennyMac announced a strategic transaction with Annaly Capital Management, which involved the sale of low-interest-rate mortgage servicing rights (MSRs). The growing servicing portfolio and industry-leading cost structure, amplified by operational excellence and technology leadership, are delivering tangible efficiency and performance gains.
The Zacks Consensus Estimate for PFSI’s 2025 earnings is $11.71 per share, indicating a 1.7% rise from the year-ago period’s reported levels. PFSI currently has a Zacks Rank #3 (Hold) and a market capitalization of $7.6 billion.
Price and Consensus: PFSI
Federal Agricultural Mortgage: The company, also known as Farmer Mac, is a federally chartered corporation that combines private capital and public sponsorship to create a secondary market for various loans made to rural borrowers. Farmer Mac’s strategic diversification across Farm & Ranch, Corporate AgFinance, and Infrastructure Finance, including key growth areas like renewable energy and broadband, positions it to navigate market volatility while capturing long-term opportunities in rural America. This multi-segment approach balances risks and growth potential. In December 2025, AGM completed a $313.5-million securitization of agricultural mortgage loans. This transaction reflects the strength of the company’s portfolio, as agricultural assets continue to generate significant institutional investor demand despite the volatile macroeconomic climate.
The Zacks Consensus Estimate for AGM’s 2025 earnings is pegged at $17.53 per share, indicating a 12.1% rise from the year-ago period’s reported level. Farmer Mac currently has a Zacks Rank #2 and a market capitalization of $1.9 billion.
Price and Consensus: AGM
LendingTree: This parent company of LendingTree, LLC, is headquartered in Charlotte, NC, and has been operating solely in the United States since July 1998. Its online marketplace provides clients with access to product offerings from more than 600 partners.
LendingTree is focusing on improving purchase conversion rates while assisting in meeting its customers’ demands for home equity loans. The company’s market-leading position and flexible business model provide further diversified solutions for a wider array of lenders, enabling it to navigate through fluctuating macroeconomic situations.
TREE is committed to boosting revenues by diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has increased its services, such as credit cards, and widened loan offerings to personal, auto, small business and student loans. With the launch of the LendingTree WinCard in partnership and an Upgrade in 2023, the company provided its first branded consumer credit offering.
The Zacks Consensus Estimate for TREE’s 2025 earnings is pegged at $4.79 per share, indicating a 50.2% rise from the year-ago period’s reported level. TREE currently has a Zacks Rank #3 and a market capitalization of $860 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TREE