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3 Mortgage & Related Services Stocks to Watch Amid Industry Headwinds
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The Zacks Mortgage & Related Services industry continues to face headwinds due to persistent volatility in mortgage rates. With the Federal Reserve hiking rates this week amid persistent inflation and signaling one more rate hike later in the year, mortgage rates are expected to remain elevated in the near term. This is likely to weigh on home purchase applications while refinancing activity remains muted, 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 has 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
High Mortgage Rates Keep Homebuyers on the Sidelines: Mortgage rates have climbed to nearly 7% in recent weeks from the low-6% range at the beginning of the year. Also, the Federal Reserve’s 25-basis-point rate hike at the conclusion of its two-day FOMC meeting on Wednesday marked the first rate increase since July 2023 and signaled renewed efforts to contain persistent inflationary pressures. As such, mortgage rates are likely to remain elevated in the near term.
Elevated borrowing costs, persistent affordability constraints and broader economic uncertainty continue to weigh on housing demand, keeping many prospective homebuyers on the sidelines. Higher mortgage rates also limit refinancing incentives, resulting in subdued mortgage origination and refinancing activity.
These trends are likely to intensify operational and financial challenges for Mortgage & Related Services industry players. Lower transaction volumes could pressure gain-on-sale margins, mortgage-related investment activity and fee generation, ultimately constraining top-line growth across the industry.
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 remain 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 U.S. single-family mortgage debt outstanding projected to reach $15.1 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 #239, which places it in the bottom 3% of 247 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 two to one. 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 2026 have been revised 44.4% 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 46.9% in this period against the broader sector's growth of 6.8% and the S&P 500 composite’s appreciation of 14.2%.
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 1.63X compared with the S&P 500's 7.09X. Over the last five years, the industry has traded as high as 7.18X, as low as 1.63X and at the median of 3.53X.
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 its broader sector ensures that the group is trading at a premium. The Zacks Finance sector's trailing 12-month P/B of 4.42X 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.
RKT’s end-to-end housing platform is positioned to benefit from improving mortgage demand and capture further market share. The Redfin and Mr. Cooper integrations have expanded its reach across home search, origination, servicing and client retention.
During the first half of 2026, Rocket continued to gain purchase and refinance share, supported by a servicing portfolio of roughly $2 trillion in unpaid principal balance (UPB) and 9.1 million clients.
The Redfin and Mr. Cooper integrations offer meaningful cost and revenue synergy opportunities that should strengthen Rocket Companies’ operating leverage as the combined platform scales. By the end of the first half of 2026, management had already realized roughly half of the targeted $400 million of Mr. Cooper-related expense synergies and expects to achieve the full amount by year-end, a year earlier than initially planned.
The company has also identified an additional $100 million of annualized synergies expected in the first half of 2027, supported partly by the completed servicing migration and improved recapture opportunities.
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, AGM is well-equipped to optimize financial performance and maintain stability through economic cycles.
AGM's business continues to expand at a healthy pace, supported by broad-based growth across its agricultural and infrastructure finance platforms. Outstanding business volume reached a record $37.2 billion at the end of the second quarter of 2026, up 22% year over year, while the company added $2.4 billion of net portfolio growth during the quarter. Sustained customer demand, while maintaining disciplined underwriting and risk management, will keep supporting AGM’s financials.
The Zacks Consensus Estimate for Federal Agricultural Mortgage’s 2026 earnings has been unchanged over the past week. This Zacks Rank #2 (Buy) company’s earnings for 2026 are expected to rise 24.4% year over year.
It has a market capitalization of $2.39 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 volatile 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.
Management’s 2026 outlook assumes continued strength in Insurance with ongoing carrier competition and improving marketing efficiency as key drivers through the year.
The Zacks Consensus Estimate for TREE’s 2026 earnings has been unchanged over the past week. This Zacks Rank #3 company’s earnings for 2026 are expected to surge 52.9% year over year.
View the Zacks #1 Rank List
Image: Bigstock
3 Mortgage & Related Services Stocks to Watch Amid Industry Headwinds
The Zacks Mortgage & Related Services industry continues to face headwinds due to persistent volatility in mortgage rates. With the Federal Reserve hiking rates this week amid persistent inflation and signaling one more rate hike later in the year, mortgage rates are expected to remain elevated in the near term. This is likely to weigh on home purchase applications while refinancing activity remains muted, 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 has 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
High Mortgage Rates Keep Homebuyers on the Sidelines: Mortgage rates have climbed to nearly 7% in recent weeks from the low-6% range at the beginning of the year. Also, the Federal Reserve’s 25-basis-point rate hike at the conclusion of its two-day FOMC meeting on Wednesday marked the first rate increase since July 2023 and signaled renewed efforts to contain persistent inflationary pressures. As such, mortgage rates are likely to remain elevated in the near term.
Elevated borrowing costs, persistent affordability constraints and broader economic uncertainty continue to weigh on housing demand, keeping many prospective homebuyers on the sidelines. Higher mortgage rates also limit refinancing incentives, resulting in subdued mortgage origination and refinancing activity.
These trends are likely to intensify operational and financial challenges for Mortgage & Related Services industry players. Lower transaction volumes could pressure gain-on-sale margins, mortgage-related investment activity and fee generation, ultimately constraining top-line growth across the industry.
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 remain 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 U.S. single-family mortgage debt outstanding projected to reach $15.1 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 #239, which places it in the bottom 3% of 247 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 two to one. 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 2026 have been revised 44.4% 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 46.9% in this period against the broader sector's growth of 6.8% and the S&P 500 composite’s appreciation of 14.2%.
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 1.63X compared with the S&P 500's 7.09X. Over the last five years, the industry has traded as high as 7.18X, as low as 1.63X and at the median of 3.53X.
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 its broader sector ensures that the group is trading at a premium. The Zacks Finance sector's trailing 12-month P/B of 4.42X 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.
RKT’s end-to-end housing platform is positioned to benefit from improving mortgage demand and capture further market share. The Redfin and Mr. Cooper integrations have expanded its reach across home search, origination, servicing and client retention.
During the first half of 2026, Rocket continued to gain purchase and refinance share, supported by a servicing portfolio of roughly $2 trillion in unpaid principal balance (UPB) and 9.1 million clients.
The Redfin and Mr. Cooper integrations offer meaningful cost and revenue synergy opportunities that should strengthen Rocket Companies’ operating leverage as the combined platform scales. By the end of the first half of 2026, management had already realized roughly half of the targeted $400 million of Mr. Cooper-related expense synergies and expects to achieve the full amount by year-end, a year earlier than initially planned.
The company has also identified an additional $100 million of annualized synergies expected in the first half of 2027, supported partly by the completed servicing migration and improved recapture opportunities.
The Zacks Consensus Estimate for RKT’s 2026 earnings has been unchanged over the past week. This Zacks Rank #3 (Hold) company’s earnings for 2026 are expected to surge 121.4% year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It has a market capitalization of $36.37 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, AGM is well-equipped to optimize financial performance and maintain stability through economic cycles.
AGM's business continues to expand at a healthy pace, supported by broad-based growth across its agricultural and infrastructure finance platforms. Outstanding business volume reached a record $37.2 billion at the end of the second quarter of 2026, up 22% year over year, while the company added $2.4 billion of net portfolio growth during the quarter. Sustained customer demand, while maintaining disciplined underwriting and risk management, will keep supporting AGM’s financials.
The Zacks Consensus Estimate for Federal Agricultural Mortgage’s 2026 earnings has been unchanged over the past week. This Zacks Rank #2 (Buy) company’s earnings for 2026 are expected to rise 24.4% year over year.
It has a market capitalization of $2.39 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 volatile 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.
Management’s 2026 outlook assumes continued strength in Insurance with ongoing carrier competition and improving marketing efficiency as key drivers through the year.
The Zacks Consensus Estimate for TREE’s 2026 earnings has been unchanged over the past week. This Zacks Rank #3 company’s earnings for 2026 are expected to surge 52.9% year over year.
It has a market capitalization of $373.2 million.
Price and Consensus: TREE