Over the past few months, the Federal Reserve has shifted back into easing mode, rolling out a series of interest rate cuts that mark a clear change in policy. The central bank delivered 25-basis-point reductions in September, October, and December, bringing the federal funds rate to a target range of 3.50%–3.75%, its lowest level since 2022.
The impact won’t be felt overnight, but the direction is clear. As borrowing costs trend lower, pressure on consumers should ease and credit activity is likely to pick up. Housing stands out as a key beneficiary, particularly homeowners with variable-rate mortgages and buyers looking to secure more favorable financing. Those considering refinancing or tapping home equity may also find conditions improving.
From Jefferies, analyst Matthew Hurwit has been closely tracking the shift and offers a concise take on what it means.
“While Fed cuts do not mechanically translate into lower mortgage rates, easing policy expectations, lower volatility, and improved affordability dynamics are incrementally supportive for mortgage demand and originator earnings power. Fannie Mae forecasts include a 40bps decline in the 30-year fixed-rate mortgage by the end of 2026, driving a rebound in origination volumes to $2.3T in 2026 and $2.5T in 2027,” Hurwit noted.
Hurwit follows up this outlook by tagging mortgage stocks that are set to rise in a rate-cutting environment. The Jefferies analyst is pointing out two mortgage stocks in particular, and we’ve used the TipRanks database to look up the broader Wall Street view on these names. Here are the details.
Walker & Dunlop (WD)
First on our list is Walker & Dunlop, a commercial real estate capital provider, with a diverse portfolio that includes investments in multifamily, industrial, office, retail, and hospitality properties. The company is one of the largest providers of financing solutions in US commercial real estate, and works with both owners and operators of properties.
Walker & Dunlop has been in operation since 1937, and in its 89 years of business it has built itself into a big player in the real estate industry. The company has a $2 billion market cap and saw $40 billion worth in total transaction volume last year. Its 1,400-plus employees work out of 44 offices.
Shares in WD took a hit recently (the stock is down 27% in the last three months), as fears of fraudulent loan activity have resurfaced. The fears revolve around fraudulent loans originated during the COVID pandemic period, when some loans were made based on fraudulent borrower documentation. There is now some worry that the company will be required to repurchase these loans. We should note that company management has indicated that these issues are not unique to WD, and that, since the COVID period, underwriting practices and document controls have been significantly tightened.
One thing we should note, however, is that Walker & Dunlop’s stock beat the forecasts on earnings and revenues in the last reported period, 3Q25. The quarterly revenue, at $337.7 million, was up 15.5% from the prior-year period, and was $16.2 million better than had been expected. The bottom line, at $1.22 per share by non-GAAP measurements, beat the forecast by 2 cents per share. As of the end of Q3, the company has a year-to-date total transaction volume of $36.5 billion, for a 38% year-over-year increase.
In his coverage of this stock, Jefferies analyst Hurwit starts at the basics, examining the company’s sound foundation: “Walker & Dunlop has historically sustained positive returns even in difficult rate environments, driven by its fee-based servicing, advisory, and capital markets franchises. This earnings mix supports a valuation framework that looks through near-term rate volatility and anchors on normalized fee generation rather than peak origination volumes. Servicing and asset management generate approximately $0.5B of stable, contractual revenue, and escrow balances provide an attractive earnings lever, even as short-term rates move lower.”
Looking forward, the analyst goes on to explain why this stock should attract investors. He writes, “In our view, near-term valuation remains constrained by uncertainty around fraud-related repurchase exposure and GAAP volatility tied to MSR valuation, even as underlying fundamentals improve. As these overhangs diminish and WD demonstrates a more stable earnings profile through 2026 and beyond, we see scope for multiple expansion on normalized earnings power, rather than incremental upside driven purely by estimate revisions.”
Altogether, these comments support Hurwit’s Buy rating and $75 price target, pointing toward a one-year gain of 23%. (To watch Hurwit’s track record, click here)
Overall, WD shares get a unanimous Strong Buy consensus rating, based on 3 recent positive analyst reviews. The shares are currently priced at $58.72 and the $84 price target indicates room for an upside of 43% in the next 12 months. (See WD stock forecast)
Rocket Companies (RKT)
The next stock we’ll talk about, Rocket Companies, is a Detroit-based fintech involved in mortgage lending, real estate, and personal finance. The company’s subsidiaries include Rocket Mortgage, Rocket Homes, Rocket Close, Rocket Money, and Rocket Loans – and last year the company acquired both Redfin and Mr. Cooper.
Rocket Companies was founded in 1985. In its 30 years of business, the company has accumulated a huge database of client information; it currently draws insights from its 160 million-plus annual client calls and its database is upwards of 30 petabytes. With this in the background, we should note that the company has completed more than 1 million e-closings, originated more than $1.8 trillion in home loans, and boasts a 97% client retention rate.
Some key points to know about Rocket Companies are the two recent acquisitions. The first, completed in July, was the $1.75 billion merger with Redfin. The deal was conducted entirely in stock. It was followed in October when Rocket Companies announced that it had completed the $14.2 billion all-stock acquisition of Mr. Cooper. These moves significantly increase Rocket’s presence in the real estate industry.
Not long after announcing the completion of the Mr. Cooper deal, Rocket also released its 3Q25 results. In that period, Rocket had a top line of $1.78 billion, a figure that was up almost 35% year-over-year and beat the forecast by $133.9 million. At the bottom line, Rocket’s non-GAAP EPS of $0.07 was down a penny from 3Q24 but was 2 cents better than expected.
When we turn again to Matt Hurwit, we find the Jefferies analyst taking an upbeat view, basing his stance on numerous factors. Hurwit says of this firm, “Rocket is no longer just a mortgage manufacturer; it is a vertically integrated system designed to capture a customer once and support them from search through closing and then through the life of a loan. RKT shares do not yet reflect the step-change in earnings power, resilience, and strategic positioning created by the acquisitions of Mr Cooper and Redfin in 2025. We expect the EPS in a normalized $2.5T per annum mortgage market to be higher than the consensus is modeling, and that current integration noise creates an attractive entry point for investors willing to underwrite the medium term.”
Hurwit lists several factors that will be supportive for Rocket going forward, saying, “The drivers of near-term growth comprise: (1) the Mr Cooper acquisition adds a more stable base of recurring earnings and a powerful engine for originations, (2) an expected rebound in originations via pent-up demand and falling mortgage rates, and (3) deal synergies.”
When he quantifies his stance, Hurwit gives RKT shares a Buy rating with a $25 price target that suggests a one-year upside potential of 26%.
This is the bullish take. Hurwit’s Buy rating aside, all 7 other recent reviews are Holds, making the consensus view a Hold. Most seem to think the shares are overvalued; the stock is priced at $19.88 and its $13.83 average target price implies a downside of 30% for the coming year. (See RKT stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.