Mortgage rate dip will unleash housing demand: Rocket CEO

Mortgage rates dipped for the third straight week after peaking around 8% this fall. Rocket Companies (RKT) CEO Varun Krishna says this relief will unlock pent-up housing demand despite affordability challenges from higher rates. Krishna notes rate volatility has made breaking into the housing market difficult, however recent cooling could provide opportunities for both sidelined buyers and sellers.

Krishna believes that a "customer and client obsession" mindset fostered at former employer Intuit, prepared him to identify consumer problems and streamline solutions, a strategy now applied at Rocket to provide a "frictionless" home-buying experience. Krishna aims to cut back on complexity in housing deals as younger generations pursue first-time homeownership.

"The demand is there," Krishna tells Yahoo Finance's Brian Sozzi, adding: "I think this will be a great opportunity for folks to hop into the business of buying a home."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

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BRIAN SOZZI: All things housing continue to be really one of the hottest topics on Yahoo Finance with good reason. Mortgage rates are finally off their peak, perhaps enticing some folks to get back in to the housing market. Let's welcome in Varun Krishna, CEO of Rocket Companies.

Varun, I should say the new CEO of Rocket Companies. You just started, what, a couple of weeks ago? Early observations on the job?

VARUN KRISHNA: Thank you for having me, Brian. Great to be on the show. It's been an amazing transition, you know.

I really appreciate the experiences that I'm having so far. I'm learning a lot spending time with our team members, getting to know the business, getting to know the culture. And I'm having a blast.

BRIAN SOZZI: How is it different? You're a product guy, how are you seeing the business differently than, let's say, someone who had that really robust experiences in all things mortgages, let's say?

VARUN KRISHNA: Yeah. You know, I think, first off, the mortgage business is one of those businesses that I felt, like, was always ripe for disruption from a technology approach. And so when you think about where we're at now with the inflection point that artificial intelligence is bringing, the product person in me is constantly looking for ways that we can build an awesome product, an awesome user experience, something that is simple, that's fast, that creates certainty. And so when I looked at the overall experience, obviously, Rocket is world class at what it does today. But I think we're just scratching the surface of what's possible tomorrow when you especially think about the role that AI and data play in the journey.

BRIAN SOZZI: And you spent a lot of time at Intuit, right?

VARUN KRISHNA: That's right.

BRIAN SOZZI: Intuit's a company we know here very well. "Through the Lens" often speaking with CEO Sasan Goodarzi. What did you learn from that operation that you're applying here?

VARUN KRISHNA: You know, I think the biggest thing that I learned from Intuit was really just customer and client obsession, really directly observing your clients and customers, falling in love with the problems that they face, and then thinking broadly about how you can solve those problems in durable ways. That is something that I'm very grateful for from a learning perspective from my Intuit time.

BRIAN SOZZI: One of the hottest stories really on our site right now is the fact that mortgage rates have now started to back up off the peaks of around 8%. The 30-year, of course, down for three straight weeks. What has that caused in your business? What are some trends you can call out?

VARUN KRISHNA: I think we're certainly seeing some momentum as a result of just some of the recent rate pressure relief. And also, if you look at some of the forecasts, if you look at what the MBA is projecting, what the Treasury is projecting as well as the analysts, there's a good chance that we expect some rate pressure going into next year up to-- maybe up to 150 basis points, which is massive. And that's going to be great.

You have a lot of consumers who have been on the sidelines, a lot of pent up demand. I mean, people still want to buy and sell homes, so the demand is there. And I think this will be a great opportunity for folks to, kind of, jump into the business of buying a home. I think the other thing that is also really interesting is even for folks who have purchased this past year, you know, that rate pressure relief is also going to be an opportunity to save some money and refinance. And so I think we're going to see some good things in this next year.

BRIAN SOZZI: The momentum that you mentioned, is it being driven by millennials? And I ask that because housing affordability, it's still tough. I'm an aging millennial and a lot of my friends, they don't have the money still to get a home.

VARUN KRISHNA: You know, I think one of the great things is I read an article the other day that talked about how, you know, 65% of Gen Zers actually want to buy a home in the next five years. The unfortunate thing is the journey is going to be one that's filled with friction. And that's why we really focus on technology as we think about Rocket.

How can we make the home buying experience more frictionless? How can we make it faster? How can we add certainty? How can we create value?

I think what's great is you have a generation now that has the ability to unlock significant wealth with the sheer size of the population. And so we're very excited to take a more technology-centric approach to the homeownership experience as we've always done, but in particular, you know, with that new population.