(Reuters) – Investors fueling an initial public offering bonanza are snubbing many U.S. mortgage providers’ stock market debuts over concerns that the sector might have reached its peak.
Five mortgage vendors have scaled back or canceled plans to go public in the last four months, as investors flinched at their frothy valuations. This may bode poorly for IPOs by other home loan providers such as Better.com and NewRez.
Many lenders have never had it so good, as affluent professionals fleeing big cities during the COVID-19 pandemic take out large loans to buy homes in the suburbs, and as near-record low interest rates fuel refinancings.
Yet investors and analysts say IPO hopefuls in the sector have not priced in an expected housing market slowdown in 2021.
“Investors don’t like buying into a company at the start of a down cycle, and mortgage originations are an extremely cyclical business,” said Matthew Kennedy, a senior strategist at IPO-focused research firm Renaissance Capital.
LoanDepot Inc was forced to cut its IPO by 75% to $54 million this month, after investors balked at its request to be valued as highly as $6.8 billion. Home Point Capital Inc downsized its IPO by 40% at the end…