Executive Summary
Five key themes will dominate mortgage lending in 2021. While 2020 was catastrophic for many people and businesses, persistent low interest rates made it a banner year for mortgage production. Now the Federal Reserve expects to hold the line on rates at least until 2023, and mortgage production should stay at full capacity through 2021. This high volume and high margin environment is great for profitability.
Persistent low rates and strong earnings provide a window of opportunity to raise capital and/or monetize investors equity. Executing an IPO requires a lot of time and hard work – 4-6 months during which IPO execution will feel like a second full-time job for key executives; it also requires operational improvements, improved internal controls and very disciplined execution. An IPO is not for everyone (for details, see our research on IPOs). Most mortgage businesses will not benefit from the IPO trend. However, all can take advantage of the robust market for capital raising. This is the best opportunity to raise capital and/or monetize equity in 20 years, and it may not last long.
