Rocket Companies has a new product to market to millions of users of its personal finance app, Truebill — home equity loans.
Rocket is pitching subsidiary Rocket Mortgage’s new home equity loan as “one more way to pay off debt that has risen along with inflation” as Federal Reserve interest rate hikes drive up the cost of carrying a credit card balance. Although mortgage rates are also on the rise, surging above 6 percent in June, credit card issuers often charge double-digit interest rates.
According to the latest data from the Federal Reserve, credit card and other revolving debt has grown from $973 billion in the first quarter of 2021 to $1.11 trillion in May. Thanks in part to astronomical home price appreciation, Americans have about 10 times that much tappable equity in their homes — about $11 trillion or $207,00 per homeowner, according to real estate data aggregator Black Knight.
The Fed’s data shows credit card users who were carrying a balance on their account paid an average interest rate of 16.65 percent in May, up from 15.9 percent in the first quarter of 2021. Even personal loans are often a better deal with rates on 24-month loans averaging 8.73 percent in May, according to the Fed.
Now Rocket can offer consumers who want to consolidate high-interest debt at lower rates the option of taking out a home equity loan or a personal loan.
Rocket subsidiary Rocket Loans offers personal loans of $2,000 to $45,000, while Rocket Mortgage’s new home equity loan lets homeowners take out 10- or 20-year, fixed-rate loans of $45,000 to $350,000.
“Our goal is to consistently create financial products that help our clients achieve their goals,” said Rocket Mortgage CEO Bob Walters in a statement. “In the current market, short-term interest rates have risen sharply — making it much harder to pay off credit card debt. With our new home equity loan, clients can improve their lives by having a payment they can more comfortably afford.”
Both products will be offered to users of Rocket’s personal finance app, Truebill, which Rocket acquired in December for $1.27 billion. Truebill, which will rebrand as Rocket Money in August, had 3.4 million users as of March 31, and Rocket hopes to funnel even more consumers into the app by offering free premium accounts to 2.6 million Rocket Mortgage servicing clients.
The nation’s largest provider of home loans, Rocket Mortgage closed $351 billion dollars of mortgage volume across all 50 states in 2021 from loan production centers in Detroit, Cleveland and Phoenix.
But as rising interest rates have crimped its mortgage business, Rocket has repositioned itself as a fintech platform, with a stable of related businesses.
- Rocket Central: A centralized hub for the Rocket Cos. fintech platform providing technology, accounting, legal services, public relations and human resources. It is formerly known as Rock Central.
- Rocket Homes: A real estate brokerage and search portal that allows consumers to search multiple listing service data for homes, connect with a real estate professional and obtain mortgage approvals through Rocket Mortgage.
- ForSaleByOwner.com: An online marketplace enabling consumers to buy or sell properties on their own, offering financing through Rocket Mortgage.
- Amrock: A national provider of title insurance, property valuations and settlement services and “preferred provider” to Rocket Mortgage.
- Amrock Title Insurance Co.: A nationwide title insurer, providing underwriting services for national title insurance agent, Amrock.
- Rocket Auto: A Virtual marketplace where consumers can shop for cars offered by a network of dealers.
- LowerMyBills.com: An online comparison service for mortgages, credit cards, insurance, loans, home services and personal finance.
- Core Digital Media: A digital, social and display advertiser generating leads for mortgage, insurance and education providers.
- Nexys Technologies: Software solutions for streamlining, digitizing and automating mortgages processes.
- Rock Connections: A sales and support platform providing contact center services including appointment setting, prequalifying clients, lead and efficiency consulting, lead generation, reporting and analytics.
- Rocket Innovation Studio: Recruits and mentors technology talent to support the needs of Rocket Companies.
- Woodward Capital Management: An issuer of private label mortgage-backed securities, providing funding for loans originated by Rocket Mortgage.
- Lendesk: A Canadian mortgage technology provider of products to digitize and simplify lending.
- Edison Financial: A Canadian digital mortgage firm that employs Lendesk’s Spotlight as its lender submission platform. Edison Financial will rebrand as Rocket Mortgage later this month.