Rocket Companies, Inc. (RKT) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining us for this fireside chat with Rocket Companies' CEO, Jay Farner. We have a number of prepared questions we're going through. But if anyone in the audience would like to ask a question, click on the ask a question button in the upper right-hand corner of your screen and follow the prompts to submit your question, and we'll do our best to address it in the time we have today. With that out of the way, let's get to the discussion. Jay, thank you very much for joining us. Really appreciate it.

Let's focus first on kind of broader efforts to grow the purchase business. You recently set a goal to become the #1 retail purchase lender in the next 2 years and highlighted the nearly doubling year-over-year in cubic feet growth and purchase on the recent earnings call. What is Rocket doing to grow further purchase and reach your 2023 stated goal?

Yes. Thanks for the question. And maybe just taking a step back, when I think about purchase, I kind of think about the entire industry and all of the aspects of purchasing a home. Lending, of course, being one of them, one of the places that we play and huge opportunity for us to be the largest purchase lender by simply growing our purchase market share to be more similar to our refinance market share. But our strategy is far bigger than just purchase lending. Our strategy really starts with disrupting how people buy a home in this country. And I think between 2020 and the start of 2021, it's become evident to everyone that there's a better way between finding inventory, all of the parties that are involved, getting loans closed quickly. It's just -- it's broken. And so we have put a lot of effort in the last 24 months into growing out our Rocket Homes platform, which really allows us to participate every step of the way, helping a consumer buy a home. So think about finding the right real estate agent, if that's appropriate. We have many clients who are now working through our ForSaleByOwner.com website, allowing them to sell their homes without the use of an agent. We've got our MLS platform that now covers over 80% of the country. So we've got properties online. We've launched 3 or 4 beta programs to help consumers find inventory that we'll talk about as we get into early 2022 and be able to reference our success as we grow out those channels, including our centralized real estate offering, which is a reduced fee offering for our clients who want to sell homes. Our iBuyer program that really gives people confidence in going and buying a new home because they know that their existing property will be taken care of, so there's no contingencies, which is one of the things that puts somebody in a bad position right now when you're up against a cash buyer. Our overnight underwrite, which allows our clients to have a fully underwritten loan, make an offer at 7:00 p.m. By 8 in the morning, they've got that guarantee that we've fully underwritten their mortgage, making them similar to a cash buyer. So all of these things that we're doing change the dynamic in terms of how you can buy a home in this country. So think about that and then think about the title business that comes along with that, the appraisal business and streamlining this process for our client base, and that's how we're going to win, by giving people a better experience, a different experience than what they've got going on today. That's on the retail side. Now if we look towards our partner channel, you're going to see us continue to lean into partnerships like Credit Karma, one of the largest purchase lead generation sites out there. We've got a unique partnership with realtor.com as well, generating purchase lead flow. And then we've got our TPO, our broker network, where we're taking our client base. And sometimes the best opportunity for them is to work with our retail mortgage bankers. In other cases, they would prefer to work with one of our TPO partners. And so that's a unique opportunity where we can create clients for those brokers, strengthen the broker relationship and increase the conversion rate from interested client to close mortgage, title, real estate, et cetera. So all of these things combined give us an incredible opportunity to double our purchase business. You saw us double it actually from Q2 of 2020 to Q2 of 2021, we doubled. And none of these things had really been going at full steam. Now as we work through 2021, they are, and really excited about what we'll see in the second half of 2021, but more importantly, in 2022. That's why we're so confident we can be the largest purchase lender here within the next 24 months.

Okay. Very helpful. How should we be thinking about the purchase mix between your direct-to-consumer and partner segments?

Yes. Well, both areas are going to benefit from all of the things I've just described. I would think about us -- we're more in the middle of the funnel. If you think about the entire purchase experience, you might have MLS listing sites or lead generation sites like a Zillow or realtor.com that play at the top of the funnel. They're attracting millions and millions of consumers. A very small sliver is actually interested in purchasing or selling a home at any moment in time, and the vast majority of people are just browsing. Our focus is more in the middle of the funnel. How do we transact with consumers? How do we partake in the real estate transaction? How do we partake in the mortgage transaction, the appraisal, the title. Both getting the seller of the property and the buyer of the property. And so when you think about that entire package of revenue, for us, it's all about the conversion of the lead, less about whether or not it goes to our retail mortgage banker or a broker partner or an insurance agent partner or a financial planner partner. Although the revenue can be slightly different, it's really about the conversion rate. So we'll send that client to the mortgage partner that leads to the highest conversion because all of that revenue I've just described is associated with the transaction, not just mortgage revenue.

Okay. Got it. And you gave a very comprehensive introduction of the question. Anything else you want to talk about in terms of how you see Rocket Homes and the rest of the ecosystem kind of playing into achieving these goals?

Well, when I think about lifetime value of a consumer, let's maybe put on the hat of other platform businesses like in Amazon, that's the view you have to take. You have to understand, once I acquire that client, what are all the current revenue streams that could be achieved? What are the future revenue streams? What's the servicing book? In our case, the servicing book asset that is a nice hedge in a rising rate market. The value has actually increased for those clients in addition to the revenue that we can receive. And so that's the thing that I think is most important. Every day that goes by, our data science team acquires more data, our platform becomes smarter. We understand the true lifetime value of that client. And that will inform how we move forward and how much we're able to market and spend to acquire that client because we're looking at it across the entire platform of current and future revenue, where our competitors are typically simply looking at it from what kind of money can I earn today from a purchase mortgage transaction. So it's an apples and oranges situation that I think really benefits us in the short run and the long run.

Okay. Great. And then what benchmarks can investors follow to see progress on those goals and purchase?

Yes. Well, we -- of course, every quarter with our calls, we speak about our growth in purchase, we set our goals. And you're also going to notice as investors that as we get into Q4, we'll be framing this up and as we get into Q1 and Q2 of 2022. And these other areas mature more, we'll start sharing more information around how each area is growing because my -- I clearly understand it's one thing for us to talk conceptually about the different things we've invested in, it's another thing to actually be able to land on or anchor to numbers and growth. And so our IR team is working on those type of metrics that we will inform investors as we get into next year. What I'll tell you right now is this is a real business for us. Lights are turning on and off here. We've got hundreds of open recs from a technology perspective in our Rocket Homes business. There are so many initiatives that we're investing in. It's probably one of the fastest growing areas. And I'll go back to what we've learned in '20 and '21. The current model is broken. We're sitting on thousands and thousands of people who are anxious to purchase a home in this country. The way the inventory presents itself, the way that people are able to make offers on homes, the transparency or lack of transparency, all of those things need to be disrupted to really create a more fluid real estate market, and those are the type of things that we're heavily investing in right now.

Okay. Changing topics. You've navigated many market and interest rate cycles over your 36-year history. Can you talk about how you've been able to grow your business across the cycle, particularly in rising rate environments?

Yes. We're very fortunate, and we've been doubling down on the things that have worked for us over the last 36 years. So understanding that value to the client outside of margin, that's a core principle we've had for 36 years. And I think we've demonstrated that. If you look at the guidance we provided for Q3, that helps give our perspective on margin, where we've been and where we will be in the coming quarters. So that focus about technology, sales, advertising is the place to spend the money so you can have a very robust margin in any marketplace is a driving principle. But layering on top of that, what we've done -- I'll go maybe a few years back, is to lean into markets like this. Because our cost to originate and close a loan is better than most of our competition, when interest rates rise and we see people make the first move, which is typically to reduce margin that, of course, puts pressure on their revenue, which puts pressure on their ability to spend. Our ability to maintain that margin and have a lower cost to produce that mortgage means we can lean in. We can grow market share. We can spend marketing dollar, we can grab client. And there's another very important component at play. Because not only are we looking at the profitability of that client for that transaction, but we're looking at the profitability of that client for the future. Our retention rate at 90% gives us great confidence that not only will we earn money today, but we're going to take care of that client again. As rates go up, it gives us an opportunity to take care and as rates fall in the future with no cost to acquire, which means $0.70 or $0.80 of that is dropping to the bottom line. And now, as I just touched on, as we add additional services to the mix, additional revenue streams and engagement points for that time between purchase and refinance or refinance and refinance, will become even more competitive in our ability to grow market share. And then the most recent thing that we've been doing in the last 3 or 4 years is adding additional channels. So once you know that you can lean in and grow marketing in the retail channel, the question is, how do you take opportunity of reaching every consumer across the spectrum in any rate market. That means we have to have our strong broker partners, we have to have our real estate network partners, we have to have our insurance partners. And we'll be strategic. As things become more challenging in the months or years ahead, if there are other origination platforms that give us access to a client base that we don't have access to today, it creates a great opportunity for us to acquire those folks. Because our real mission is have access to all prospective buyers in this country and provide a better service than anyone else on a more efficient model that drives more revenue. So that's how we grow market share in a rising rate market. We can reach out to all prospective clients, and we can perform at a much better rate from a margin perspective and an efficiency perspective. So the last thing I'll say here is we've talked about 2021. We've discussed the fact that we'll have a record year. We'll do more mortgage volume this year than last year, although by all indications, this will be a smaller mortgage market this year than last year. So we'll grow market share. But probably a better opportunity in 2022 to grow market share as we continue to see the industry face some headwinds and our ability to go in and grab that lifetime value and grab those clients here for the future.

Okay. Excellent. Moving on to the next topic. The home buying ecosystem, what is the potential of Rocket's full-stack end-to-end home buying value chain? An ecosystem, which looks a bit like Zillow's ecosystem but starts with a leadership position in the mortgage transaction. Can you just talk about the attach rates across our home buying ecosystem?

Yes. Well, our attach rate between real estate and mortgage is 70%, which is incredibly encouraging. And really is why we're -- I referenced before, we've got hundreds of open racks and we're spending millions and millions of dollars on bettering real estate technology because we know that there's a great partnership there for us. But I want to make sure that we understand the difference. Although we have an MLS site that provides real value to our client base, we're not a top of the funnel lead -- real estate lead generation site. We're -- our focus is not how many eyeballs can we get each and every day on property. Our focus is how many people can we actually engage in the middle of the funnel who are interested in an actual transaction, right? Time is the most valuable thing that you have in life. When we're putting forward our efforts, we want to make sure that we're dealing with individuals who are going to be buying a home. And so all of those focus is on guaranteed offer through our iBuyer platform, ForSaleByOwner, centralized real estate market, agent network that we've built and the other new initiatives, Rocket labs that we've launched are all structured to increase the conversion rate of people who are going to transact on a property. And so when I think about the real estate market, and you see what we've done with mortgage, I think we're well north of whatever it is, 12%, 13%, 14% in the refinance market, growing substantially in the purchase market. There's no reason if we're bringing a better product and experience to the market that we can't have similar market share on the real estate side of the transaction. And that's really where our focus is, working with the real estate agents across the country and brokers across the country, engaging all of those different partners to ensure that we are the #1 place people think about when it comes to buying a home and then subsequently getting a mortgage.

Got it. Can you discuss the recently announced iBuying services? And how that complements what you're already doing?

Well, as we touched on before, one of the #1 factors for people getting a mortgage in today's market if not actually winning the home is there's a contingency offer, it's a contingency offer. So they have to sell an existing property. So our ability to step in there and let our clients know that there is no contingency that their offer is good, will change the way that our approval is viewed in the real estate industry. And so our buyers will be viewed more as cash buyers, and so that's going to help give them confidence and position us in a much better way compared to other mortgage lenders. In addition, we've got our 2.5 million clients in our servicing book. At any moment in time, 10%, 15%, 20% of those clients are considering buying a home. And we've researched and talked to those clients about why they're not going forward. And one of the reasons they're not moving forward is they want to know with a guarantee what they're going to receive for their current property. We have all that information. We know everything about their property. And so for us to be able to give them an offer moves them forward, and now we can be competitive or more competitive on the purchase side. And so that 90% retention rate, the biggest opportunity we have is to make sure that when a client in our servicing book goes to buy a second home or buy a new home that we are the lender. And by engaging with them on that guaranteed offer that I buy, we're getting right in the top of the funnel there. They're staying with us, and it drives our retention rate even higher.

Excellent. Moving on to the platform, you talked a lot about scalability and leverage in your platform. How should we be thinking about your platform in terms of growth opportunities and leverage on expenses?

Yes. This is probably my favorite topic. And we have -- part of our culture is we have something we call isms, or 20-isms. And these are things that we teach all of our team members, philosophies of how to think about our business. And one of the isms that the platform really has been reminding me of recently is that you'll see it when you believe it. And for us, that's how we have to operate. I understand a lot of people watching this conference are probably on the other side of the fence, right? They'll believe it when they see it. But we firmly believe that there is an opportunity in this country to help people with the most complicated transactions in their life, buying a home, getting a mortgage, doing a debt consolidation loan, buying an automobile, adding solar to their home to be more efficient. These are complicated things. These are things that take thought and trust and brand, and no one has put together a platform that can help a client deal with all of these items. And then there's probably 20 more we could all sit together and think about that we could grow from there. That's the work that we've been doing. We did a press release recently on solar. We've already got hundreds of clients in the process right now, going down the path of learning more about how they can apply solar. And we know that, that focus is only going to grow in this country, double or -- I think quadruple is what I've seen in the next 7 or 8 years. And that may be conservative. We know that this has been one of the most challenging 12-month periods to buy a car. There are more buyers than there is inventory. We're creating a marketplace. We're bringing buyers to dealers. If there's ever a time where that business shouldn't grow, it's right now because dealers don't need buyers, yet that business will double this year. We know that real estate has been challenged because of lack of inventory. Yet in the most challenging time for inventory, our real estate business will double. So that's proof to me that there is strong demand for a platform like this. So we already have the client. We've acquired the client. They've had a great experience. They're on our platform. In many cases, they're paying a mortgage payment every month to us. We're the #1 servicer in the country. So there is no cost to acquire. All the data already here. So when you think speed to decision on all of these other services, we already have the credit score. We already have the income information. We already know about the property. We already know about the square foot of that home. We already know the type of roof that they have. So we should be able to process, close that transaction faster than anyone else because of the data that we're sitting on today. And so those 2 things uniquely position us to excel in these marketplaces. I could go on and on. I could talk about the Rocket Loans technology that will allow us to be better at doing personal loans, solar loans, possibly auto loans than others because of the data we have and the technology that we've built. So there are other players for sure in each one of these industries. None of them sit on the client, the data, the brand, the experience that we do. And that's why we're so committed to building out the Rocket platform here, and that's why we're putting so much time, energy and effort into doing that.

Okay. Drilling down on rocketauto.com. What are the key growth levers we should be focused on? And could you elaborate on what this business might look like over the next 3 to 5 years?

Yes. So the first growth lever for us, the first portion for the last few years has just been proved out that we can talk to a client and help them make a decision to purchase a car without them going and seeing the car. And that's what we're able to demonstrate to the tunes of thousands of transactions a month. The second piece was before we can go and have a public-facing website, we need inventory because what you don't want is somebody, especially in this market going to your website and not finding automobiles that they want to purchase. So that has been our focus for the last 6, 7, 8 months, and that inventory now exists. I think we have something like 30,000 dealerships on -- or dealer network individual stores on our platform. So now the inventory is there. So now we launched the forward-facing website because we've got the inventory, and we know we can complete the transaction for the client. The third component -- and oh, by the way, once we launched that, we've had multiple dealer groups or dealerships reach out saying they want to join our platform as well. Now the third component will be leveraging the proprietary technology that I've just discussed to continue to reduce the friction in the transaction. Take all that we know about the client, pass that through into the tech stack that we're building. So we just take -- people on this call have been out -- they bought a car, they understand what happens. They understand the data collection that occurs. They understand what it means to have to trade in their current vehicle. How do we streamline all of those elements that drive efficiency, so we can earn more money on the transaction and make the experience better for our clients. And so that's really where our focus is now, and we're building out that tech team to achieve that. So where do I think that that's going? If you look at the top 10 dealer networks in this country, the Berkshire Hathaway Group, or the Berkshire Group, the Carvanas, the CarMaxes, the Penskes, the Rocket Auto platform should be on a run rate to be in the top 10 by the end of the year.

Okay. You mentioned leveraging the data you have on these customers. Are you mainly marketing this to people who are in your servicing portfolio where you've got that data?

Yes. So it's twofold. We're clearly going to be marketing this to our clients in our servicing portfolio because they trust us. We know a lot about them. We also know that when someone makes an inquiry for a mortgage, I think they're twice as likely to -- maybe almost 3x as likely to be buying a vehicle in the next 6 months. And so we have a client that's more engaged than the typical client in America. But we're also marketing to the clients that we talk to about a mortgage. So remember, depending on the lead source, 2%, 3%, 4%, 5%, 10% of those clients may get a mortgage. But the other 90%, 95%, it may not be right for at this point in time. We've already talked to them. We've already collected their credit score. We already know how many vehicles they have. And so marketing to that client base and helping them with a car is another approach that we're starting to take because it's a way for us to build the relationship, maybe the relationship that starts with the home, but maybe the relationship starts with the car, and then the home is the secondary transaction. Either way it works great for us. So it's not just the servicing book, it's also the million-plus clients that we speak to a month about a mortgage. And all of that marketing, we've already spent the money on for the mortgage. So the cost -- the marketing costs that others deal with each and every day on the automobile side, we don't have to deal with because we've already paid for that through another channel.

Makes sense. Turning to your partner network. Rocket has seen fast growth in the partner network since launching the broker channel in 2018. And over the past 6 to 8 months, we've observed heightened competition. How do you view Rocket's competitive advantage in the broker channel? And why is having a multichannel business important to Rocket?

Yes. Well, we touched on the fact that it's critically important because we need to continue to grow market share, and with all the different services and products and revenue streams we have, that wholesale channel is a great channel for us, just like retail is. But I have -- this is the most excited I have been about our broker channel for a few reasons. Our team loves to compete. You just got to go back the last 36 years and watch what we've done. And so when competition is increased, that's when people really buckle down and find great ways to grow. And that's exactly what we've seen. The other important component is that the lines of marketing have been drawn. So in a world where you're fighting for every broker, you have to be thoughtful, of course, about how you're marketing, in a world where people are carving out their area. And our message, of course, is competition is good. The entire superpower of a broker is their ability to shop multiple lenders. If certain bookers don't want to have that ability to shop multiple lenders and only want to work with one partner, well, then they're going to limit the product offering that they can bring to their consumer. They're going to limit the price power that they can bring to consumer. But it also says to us, now we know who's in our camp, we can bring all of our services to those brokers who are aligned with us, as I touched on before. Clients who come to us because they want to buy a home but prefer to work with somebody that's local. Great. We'll send that lead over to them. Other marketing benefits that we can bring to the table. Some of our partners choose to leverage the Rocket brand to strengthen their offering, we'll offer that to them. And you're going to see some additional announcements in Q4, we're bringing more of these services to our partner group to empower them to grow because as they grow their business, we grow ours. So very excited about it. It's just another way to help grow small business, penetrate every market in the country, bring great value to our broker partners and also bring clients into our ecosystem. And it's one of many opportunities that we've got, but an important one that we'll continue to lean into and grow market share in.

Got it. And the competition has been quite fierce the last couple of quarters in there. Any update you can provide us on how that's going?

I think it's going great. I think that in a more challenged market where one of the solutions, if you don't necessarily have the brand, if you don't have the relationships, if you don't have the operational efficiencies, the lever that you can pull is margin, that benefits us because our business is so efficient, we can operate at a margin and be profitable, not only at the first transaction, but the lifetime value where others can't. And so -- as you've seen our guidance, as we talked about the profitability of this business this year, which will be incredibly profitable, it allows us to continue to invest when others without maybe the sale of their MSRs, are cash flow negative, they've got to be thinking about how do they reduce expenses, how do they invest less. And so -- the business is great where it's at, but it also gives us an opportunity to create some separation while we can continue to invest and others probably have to hit the pause button.

Okay. Great. Moving to servicing. Mortgage originators seem to be servicing in different ways. Rocket seems to be servicing as a strategic product and a complement to the business. Can you talk about your servicing portfolio and why it's important to Rocket?

Well, it's important for a ton of reasons. Number one, for many of our clients, they view the entire mortgage transaction not only as the origination, but where they're making their payment. And so our ability to offer them incredible service all the way through the life of their loan is important. Number two, the data that we're able to collect. So understanding how our clients are behaving and using that to inform the decisions that we'll make either for our retail group or, of course, to help our broker partners, either way, that's a win for us to have that data. Number three is the value of the servicing. So in a more challenging market, while we're growing market share on the origination side, the value of our servicing book is increasing. And so that gives us all kinds of opportunity not only to borrow against that book, if we wanted to leverage it a bit, just watch it grow. But either way, we're winning. In a reduced rate market, we're recapturing those clients and bringing them back on the book and earning the revenue that we would generate off the origination. In a rising rate market, the clients are paying us each month. The value of that servicing is increasing. So that's a beautiful hedge for our business. And then the last thing that I'll touch on, we spent a lot of time already discussing it is that, as we collect more data, as these additional businesses mature, as we understand the lifetime value of that client for all those verticals I've just discussed, we become even more strategic in how we view those MSRs. Whether that means how we change our marketing to acquire originations, whether that means that we can get more aggressive in the purchase of MSRs. We look at the lifetime value of that client understanding all of the data, and I think that's far different than our competitors out there acquiring MSRs. And so that will just be -- that's a flywheel that the momentum is just growing and growing on that. Every time our businesses grow and more data comes in, the smarter we get about how we acquire MSRs.

Great. And could you touch on kind of what opportunity the 90% retention means for Rocket?

It means that we need to view our business like an Amazon Prime business. It means that we've got a loyal servicing book that wants to continue to do business with us. It means that we've got to be really thoughtful because we can't boil the ocean, so we can't do everything. We need to make sure that we execute on the additional related businesses that we bring on the platform, but it gives us great confidence to know that as we bring other clients on, as they engage with the Rocket brand and other services that not only do we recognize the revenue and the profit from those services, but we've got this piggy bank of future revenue and profit building that we will take advantage of as rates shift and move and change throughout the cycles. And that's really been our mission. If you're a mortgage lender, and I think this is what a lot of analysts have to face is how do they think about the different rate cycles that the economy goes through. And our mission as we continue to build out this platform is to recognize the fact that this is not a cycle business, right? We're going to excel in all cycles because of all of the different things that we're bringing to the table and how we can view our servicing book and our client platform differently than a traditional mortgage lender. So that's -- I'll go back to that you'll see it when you believe it, we are mobilizing our 27,000 people here to build out the Rocket platform from data to a brand to user experience to transaction. Everyone is focused on that mission. And as that continues to develop, I think The Street will understand how we are far different than other lenders. And we'll be, I think, a unicorn. There's nothing else out there like us and The Street will have to figure out how to value that.

Great. Turning to M&A. As you look across the ecosystem you're building, where do you see the biggest need or opportunity to invest in adding to your capabilities?

Yes. Well, there's 3 components that we always think about. We think about better tech. Is there someone out there with better tech that we can plug in that would make our process more efficient? On the servicing side, on the origination side. Every area, if we can provide better -- equal or better experience and drive down the cost of whatever we're doing, we're looking. Number two, a market that we don't have great access into today. So if you think about everybody that's in the process of getting a mortgage, the question is, are there certain niches out there where our marketing or our TPO or our RPO or our real estate network doesn't really allow the penetration we want and could we acquire a business that gives us that penetration. And then the third and I touched on this, is what's another profitable engaging business line that we could add to the platform that will make us stronger and better. So those are the 3 areas we're looking, full transparency. The first 2 that I touched on and even in FinTech, we think that there's a lot of interesting businesses out there today. We also believe that in the coming months, we'll see some pressure, and it will create some buying opportunities that may not be present today. But as people face more challenging times, there'll probably be more opportunities, and we have a lot of dry powder, billions of dollars that we can deploy when it makes sense to make those acquisitions as they kind of present themselves.

Okay. Great. Tying back into the last topic on servicing, and you may not consider this M&A, but does the strategic value placed in the servicing asset and the value you extract from the 90% retention, does that make bulk servicing acquisitions interesting to you?

It does. That's right. It does. And we want to be thoughtful about it because we have to balance the capital spend to acquire the MSR with the same capital spent to market to acquire the origination. At the end of the day, both allow us a servicing right. But if we can spend our dollars better to market and acquire an origination that also generates $7,000, $8,000, $9,000, $10,000 of revenue on the origination side, we're going to do it. But we are also sharpening our sword on the bulk acquisition side, and we'll keep getting smarter and smarter as we collect more data as we grow out these other -- as I mentioned, as we grow out these other channels and understand the true lifetime value of an MSR that we acquire through acquisition versus an origination, which is an important component and data point that we're understanding as well. Also, what's the additional marketing that we need to do. If we acquire an MSR and onboard them, not through the origination process, we're studying what's the right onboarding process and the marketing to elevate that client to feel like a rocket client, even though they didn't go through origination process. As we get better there, it will inform our ability to make more strategic bulk acquisitions as well.

Okay. Excellent. That's very helpful. Just finishing up with key trends. What are your views on home buying market, homeownership as a source of equity and new trends and regulations we should be mindful of?

Well, home equity is an incredible opportunity right now. We've seen that north of 50% of the loans that we originate today are noninterest rate-sensitive loans. Purchase is growing, as we've talked about, but also cash out transactions are growing. Home improvement is growing. And so we imagine that people will continue to see really strong levels of home equity as we get through -- obviously through the rest of '21 but into '22. And so we're uniquely positioned to take advantage of that. If you follow any of our marketing, you'll notice that a lot of that messaging is changing to that home equity opportunity that people are presented with. Purchase, we think will remain strong as well. We know that there's some fatigue in the market right now from home buyers who haven't been able to find the right property. I think that we're seeing a little bit more inventory out there at least from our ecosystem as we provide more confidence to sellers. We think we can help generate a little bit more inventory. And so we're really excited about where 2022 sits and the fact that purchase will be really strong. And interest rates. I mean, look, interest rates can go up, they can go down. We don't see anything that says that they're going to go up substantially. A gradual increase is fine. A few spikes here and there also probably provide opportunity for us to do some kind of quick market share growth that we're looking forward to. So we're watching that closely, and we'll be prepared to take advantage if we see any of that movement as well.

Okay. Great. You mentioned very high percentage of noninterest rate-sensitive originations. Do you have a feel for how much of that is more of a cash out versus just a purchase transaction?

Yes. Cash out is a strong player. As I said before, well north of 50% of all the originations we do fall into the noninterest rate bucket. But cash out plays an important role, just like purchase does. And the other thing that I'll mention there is that cash out is, of course, less interest rate sensitive. People -- whether the interest rate on your 30-year fixed mortgage is 3% or 3.25% or 3.5%, that small change in payment is really not relevant compared to the thing you're trying to accomplish with the home improvement, the debt consolidation, the purchase of a new car, the sending the child to college. So that -- we actually -- as rates rise, that will continue to accelerate because it's still a really effective way to borrow when you're tapping into the equity of your home.

Well, excellent. I think we're out of time, so I think we'll end on that note. But let me thank you for your time and your insights. We really appreciate it. Thanks, Jay.

Yes. I appreciate you having me here, and I'll hopefully talk to everybody soon.