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3 Mortgage & Related Services Stocks to Watch Amid Industry Challenges
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The Zacks Mortgage & Related Services industry continues to be hindered by volatility in mortgage rates, fueled by concerns about inflation and the broader economic outlook. With relatively higher mortgage rates, the purchase application and refinancing volumes remain subdued. This will reduce the gain on sale margin and investment activities, hurting industry players' top-line growth.
Amid the ongoing concerns, diversified business operations and encouraging scenarios for the servicing segment will help industry players like Rocket Companies (RKT - Free Report) , Federal Agricultural Mortgage (AGM - Free Report) and Lending Tree, Inc. (TREE - Free Report) .
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
Relatively High Mortgage Rates Keep Homebuyers on the Sidelines: The 30-year fixed mortgage rates rose to a nearly seven-month high in recent weeks, reversing the previous declines. Persistent inflation and geopolitical tension continues to keep Treasury yields elevated, leading to a rise in mortgage rates. Higher mortgage rates, coupled with affordability constraints and economic uncertainty, have pushed potential homebuyers to the sidelines.
Hence, mortgage origination and refinancing activity are declining. This will lead to increases in operational and financial challenges for Mortgage & Related Services industry players and decrease the gain on sale margin and investment activity, hurting industry players' top-line growth.
Competition Picks 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, many originators may struggle to be profitable in the upcoming period.
Servicing Segment to Offer Support: With significant declines in gain-on-sale margins and subdued loan origination volume, industry players are likely to increase their reliance on the service segment for profitability. In a relatively high-rate environment, the servicing segment offers a natural operational hedge to the origination business. Slow prepayment speed is expected to create tailwinds related to mortgage service rights (MSR).
Hence, MSR investments are poised to deliver significant value appreciation and offer attractive unleveraged yields. With the U.S. single-family mortgage debt outstanding projected to reach $15.2 trillion by 2026-end, there are massive growth opportunities for the industry players in the servicing portfolios.
Zacks Industry Rank Reflects Bleak Prospects
The Zacks Mortgage & Related Services industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #176, which places it in the bottom 28% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates drab 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. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. The industry’s earnings estimates for the current year have been revised 21.7% lower over the past year.
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 Underperforms Sector & S&P 500
The Zacks Mortgage & Related Services industry has underperformed the broader Zacks Finance sector and the S&P 500 composite in the past year.
The industry has declined 6.4% in this period compared with the broader sector's growth of 14.2% and the S&P 500 composite’s rise of 24.6%.
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 2.02X compared with the S&P 500's 7.75X. Over the last five years, the industry has traded as high as 9.14X, as low as 6.57X and at the median of 8.08X.
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 4.08X 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 - RKT, AGM & TREE
Rocket Companies, a Detroit-based fintech company incorporated in Delaware, operates a vertically integrated homeownership platform. The company’s ecosystem centers on the Rocket brand and the Rocket platform, delivering simple, fast and trusted digital client experiences across financial wellness, personal loans, home search, mortgage finance, and title and closing.
Rocket's end-to-end platform is positioned to convert any cyclical lift into outsized share gains amid industry-wide turnaround expected in 2026, driven by lower mortgage rates. The combination of Redfin and Mr. Cooper has strengthened Rocket’s capabilities by adding scale and reinforcing stability, growth capacity and cost efficiency.
The Redfin and Mr. Cooper integrations provide visible, near-term synergies with meaningful operating leverage upside. On the Mr. Cooper side, management has line-of-sight to $400 million in expense synergies, plus an incremental $100 million in revenues tied to higher blended recapture rates.
With an estimated 70% structural drop-through of incremental revenues to EBITDA after fixed costs and AI-driven capacity improvement, the platform is expected to scale volume without proportional headcount/cost escalations.
Management expects first-quarter 2026 adjusted revenues (inclusive of these two acquisitions) between $2.6 billion and $2.8 billion. As synergy capture ramps up, it will likely support the top line going forward.
The Zacks Consensus Estimate for RKT’s 2026 earnings has been unchanged over the past week. The Zacks Rank #3 (Hold) company’s earnings for 2026 are expected to skyrocket 203.6% year over year. Revenues are anticipated to surge 68.9% this year. It has a market capitalization of $40.9 billion.
Price and Consensus: RKT
Federal Agricultural Mortgage, 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.
The company’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.
Coupled with a disciplined fund transfer pricing framework that aligns interest expenses with funding and hedging strategies, the company is well-equipped to optimize financial performance and maintain stability through economic cycles.
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 2026 earnings has been unchanged over the past week. The Zacks Rank #3 company’s earnings for 2026 are expected to rise 16.5% year over year. Revenues for 2026 are anticipated to grow 13.2% year over year. It has a market capitalization of $1.65 billion.
Price and Consensus: AGM
LendingTree, which is the parent company of LendingTree, LLC, is headquartered in Charlotte, NC, and has been operating solely in the United States since July 1998.
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.
The Zacks Consensus Estimate for TREE’s 2026 earnings has been unchanged over the past week. The Zacks Rank #3 company’s earnings for 2026 are expected to surge 68.9% year over year. Revenues are anticipated to grow 16.3% this year. It has a market capitalization of $576.7 million.
View the Zacks #1 Rank List
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3 Mortgage & Related Services Stocks to Watch Amid Industry Challenges
The Zacks Mortgage & Related Services industry continues to be hindered by volatility in mortgage rates, fueled by concerns about inflation and the broader economic outlook. With relatively higher mortgage rates, the purchase application and refinancing volumes remain subdued. This will reduce the gain on sale margin and investment activities, hurting industry players' top-line growth.
Amid the ongoing concerns, diversified business operations and encouraging scenarios for the servicing segment will help industry players like Rocket Companies (RKT - Free Report) , Federal Agricultural Mortgage (AGM - Free Report) and Lending Tree, Inc. (TREE - Free Report) .
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
Relatively High Mortgage Rates Keep Homebuyers on the Sidelines: The 30-year fixed mortgage rates rose to a nearly seven-month high in recent weeks, reversing the previous declines. Persistent inflation and geopolitical tension continues to keep Treasury yields elevated, leading to a rise in mortgage rates. Higher mortgage rates, coupled with affordability constraints and economic uncertainty, have pushed potential homebuyers to the sidelines.
Hence, mortgage origination and refinancing activity are declining. This will lead to increases in operational and financial challenges for Mortgage & Related Services industry players and decrease the gain on sale margin and investment activity, hurting industry players' top-line growth.
Competition Picks 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, many originators may struggle to be profitable in the upcoming period.
Servicing Segment to Offer Support: With significant declines in gain-on-sale margins and subdued loan origination volume, industry players are likely to increase their reliance on the service segment for profitability. In a relatively high-rate environment, the servicing segment offers a natural operational hedge to the origination business. Slow prepayment speed is expected to create tailwinds related to mortgage service rights (MSR).
Hence, MSR investments are poised to deliver significant value appreciation and offer attractive unleveraged yields. With the U.S. single-family mortgage debt outstanding projected to reach $15.2 trillion by 2026-end, there are massive growth opportunities for the industry players in the servicing portfolios.
Zacks Industry Rank Reflects Bleak Prospects
The Zacks Mortgage & Related Services industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #176, which places it in the bottom 28% of more than 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates drab 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. Looking at the aggregate earnings estimate revisions, it appears that analysts are losing confidence in this group’s earnings growth potential. The industry’s earnings estimates for the current year have been revised 21.7% lower over the past year.
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 Underperforms Sector & S&P 500
The Zacks Mortgage & Related Services industry has underperformed the broader Zacks Finance sector and the S&P 500 composite in the past year.
The industry has declined 6.4% in this period compared with the broader sector's growth of 14.2% and the S&P 500 composite’s rise of 24.6%.
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 2.02X compared with the S&P 500's 7.75X. Over the last five years, the industry has traded as high as 9.14X, as low as 6.57X and at the median of 8.08X.
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 4.08X 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 - RKT, AGM & TREE
Rocket Companies, a Detroit-based fintech company incorporated in Delaware, operates a vertically integrated homeownership platform. The company’s ecosystem centers on the Rocket brand and the Rocket platform, delivering simple, fast and trusted digital client experiences across financial wellness, personal loans, home search, mortgage finance, and title and closing.
Rocket's end-to-end platform is positioned to convert any cyclical lift into outsized share gains amid industry-wide turnaround expected in 2026, driven by lower mortgage rates. The combination of Redfin and Mr. Cooper has strengthened Rocket’s capabilities by adding scale and reinforcing stability, growth capacity and cost efficiency.
The Redfin and Mr. Cooper integrations provide visible, near-term synergies with meaningful operating leverage upside. On the Mr. Cooper side, management has line-of-sight to $400 million in expense synergies, plus an incremental $100 million in revenues tied to higher blended recapture rates.
With an estimated 70% structural drop-through of incremental revenues to EBITDA after fixed costs and AI-driven capacity improvement, the platform is expected to scale volume without proportional headcount/cost escalations.
Management expects first-quarter 2026 adjusted revenues (inclusive of these two acquisitions) between $2.6 billion and $2.8 billion. As synergy capture ramps up, it will likely support the top line going forward.
The Zacks Consensus Estimate for RKT’s 2026 earnings has been unchanged over the past week. The Zacks Rank #3 (Hold) company’s earnings for 2026 are expected to skyrocket 203.6% year over year. Revenues are anticipated to surge 68.9% this year. It has a market capitalization of $40.9 billion.
Price and Consensus: RKT
Federal Agricultural Mortgage, 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.
The company’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.
Coupled with a disciplined fund transfer pricing framework that aligns interest expenses with funding and hedging strategies, the company is well-equipped to optimize financial performance and maintain stability through economic cycles.
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 2026 earnings has been unchanged over the past week. The Zacks Rank #3 company’s earnings for 2026 are expected to rise 16.5% year over year. Revenues for 2026 are anticipated to grow 13.2% year over year. It has a market capitalization of $1.65 billion.
Price and Consensus: AGM
LendingTree, which is the parent company of LendingTree, LLC, is headquartered in Charlotte, NC, and has been operating solely in the United States since July 1998.
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.
The Zacks Consensus Estimate for TREE’s 2026 earnings has been unchanged over the past week. The Zacks Rank #3 company’s earnings for 2026 are expected to surge 68.9% year over year. Revenues are anticipated to grow 16.3% this year. It has a market capitalization of $576.7 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TREE