Moody's lowers Home Point

Moody's Investors Service said it downgraded Home Point Capital Inc.'s corporate family rating to B3 from B2 and its senior unsecured bond rating to Caa1 from B3. Home Point's outlook was changed to stable from negative.

“The downgrade of Home Point's ratings reflects Moody's expectation that the company's prospects for profitability in 2022-23 have diminished, reflecting heightened competition due to industry excess capacity. This excess capacity has resulted from lower origination volumes due to higher interest rates. The company reported a loss of $44 million in the second quarter following a profit of $12 million in the first quarter. This loss was driven by lower origination volumes, lower gain on sale margins and still-elevated expenses,” the agency said in a press release.

The improved outlook reflects the forecast that the company's ratings reflect the challenging operating conditions in the mortgage sector that will keep pressuring Home Point's profitability, making it difficult for it to reduce financial leverage over the next 12-18 months, Moody’s said.

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