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IAC/InterActiveCorp Message Board

  • jeff44293 jeff44293 Aug 11, 2003 1:55 PM Flag

    TREE and home lending

    Lots of people have made the point that the refi industry has hit a peak for the time being. Perhaps. It sure seems plausible.

    But what you ignore is this:

    LendingTree's revenues are a function not ONLY of refinancing and home loan activity but THE PERCENT OF THOSE LOANS THAT TAKE PLACE ONLINE.

    Did you know, for instance, that Expedia and Hotels.com THRIVED, more than quintupling earnings and doubling net revenues year over year, during the period from 9/11 until now? How could they have possibly done so, given that travel declined, as we all know?

    The answer is simple: the percent of those transactions taking place online is growing at a rapid pace, far faster than the rate that the overall market is declining.

    Every new buyer that shifts spending from the telephone to the Internet is in a sense "brand new" dollars being spent online.

    And when you are talking about billions of dollars (US travel industry = $600 billion annually, according to US Travel Industry association, and Home Lending Commissions in the USA = $67 billion, according to recent analyst estimates), a percent change from 0% to 3% to 5% to 10% is a DOUBLING rate of the overall pie. Even a 10 to 20% decline in the purchases cannot stop the overall online pie from having a net increase.

    Just something to think about.

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    • Jeff,

      I have read many of your comments with interest in the past several months. For the record, I have a short position on expe, which I understand will be converted to IACI. With regard to TREE { although I believe it is only approx. 5% of IACI}, do not expect the online applications to increase in a non refi market.There are far fewer deals in a purchase market, and the attorneys become more involved in helping purchasers select banks.

      • 3 Replies to jenspop
      • >> do not expect the online applications to increase in a non refi market.There are far fewer deals in a purchase market, and the attorneys become more involved in helping purchasers select banks

        Jenspop, thanks for your comments.

        Just because there are far fewer transactions doesn't really suggest to me that the many advantages of soliciting bids online will go away any time soon. To me, it merely suggests that lenders will grow more hungry as overall demand lessens. In a suppliers-are-hungry market, buyers (i.e., home buyers and/or refinancers) benefit greatly and also move their purchases online to shop amidst the constantly changing environment and save even more money, as we have seen with the hotel sector.

      • Agreed. The vast majority of TREE's mortgage activity is refi activity and we all know the refi market is toast. Increased online utilization will not help

      • BTW,

        That being said, congrats on a huge gain which you did call and seemingly enjoyed.

 
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