2 Stocks to Invest in the Stock Market’s Hidden $35 Trillion Opportunity

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Without a doubt, the surge in artificial intelligence represents a multi-trillion dollar investment prospect. Yet, this isn’t the sole promising avenue. Hidden within the real estate sector could lie an enormous investment opportunity, waiting to be discovered.

During the period from 2020 to 2021, there was a significant increase in homeowners refinancing their mortgages. However, after this surge, interest rates significantly increased, causing the number of refinancings to decrease. Since most U.S. homeowners already have mortgage rates below 5%, it is no longer financially advisable for them to refinance at 7% or higher in order to access their home equity.

Due to record-low mortgage refinancing and home equity loan activity, coupled with a significant increase in property values over the last five years, homeowners have accumulated a substantial amount of wealth tied up in their homes. This “on paper” wealth currently stands at a staggering $35 trillion for U.S. homeowners – an all-time high. If mortgage rates begin to decrease, it could trigger a massive wave of refinancing activities, potentially reaching into the trillions of dollars.

Keeping that thought, let me share with you two notable stocks that might significantly prosper from a $35 trillion market opportunity once interest rates begin to decrease.

A mortgage giant that makes refinancing easy

In simple terms, Rocket Companies, with a 2.18% increase in its stock price, stands as the top mortgage lender in the U.S. A rise in refinancing activity could potentially spark significant growth.

In the last three months, Rocket finalized $26.1 billion worth of loan origination. Compared to the same period in 2021 when interest rates were low, the volume was significantly higher at $103.5 billion, with refinancing playing a significant role. Although it’s unlikely we’ll witness another 2021-level refinancing surge in the near future, if rates decrease, there’s a good chance we might observe a substantial increase in Rocket’s overall loan volume.

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Despite no significant increase in refinancing, there’s plenty to appreciate about Rocket. The firm is actively constructing a comprehensive real estate platform, aiming to digitize the entire home buying and selling procedure. It recently finalized the acquisition of real estate technology company Redfin, and it’s in the process of acquiring leading mortgage servicer Mr. Cooper (COOP 2.34%).

Rocket currently boasts an impressive 97% client retention rate, demonstrating its expertise in the field. An integrated real estate technology platform that offers the smoothest transactions for activities like selling, financing, buying, moving, servicing, etc., could be highly profitable. Moreover, despite being a significant mortgage lender, Rocket has ample room to expand further. The mortgage market is fragmented, with the leading 10 players holding less than one-quarter of the market collectively. Annually, around $5 trillion to $6 trillion worth of homes are sold in the U.S., and if Rocket manages to increase its share by just a few percentage points, it would make a significant impact. This is even more noteworthy when considering that interest rates might drop and the total volume could surge.

A better way to approve HELOCs

Upstart (UPST), currently at 3.78%, is all about tackling a significant issue in an efficient manner. Their primary goal is to excel at determining whether a loan will be repaid, outperforming the conventional FICO credit scoring method. They achieve this by scrutinizing numerous data points and assessing their relationship with creditworthiness. The results indicate that their platform has proven effective in this area.

As an observer, I’ve noticed that Upstart has primarily been involved in initiating unsecured personal loans for its banking partners so far. A whopping 95% of their loan origination in the first quarter fell under this category. Yet, the company is actively expanding into two additional lending sectors – auto loans and home loans, specifically Home Equity Lines of Credit (HELOCs). The initial outcomes from these ventures are quite promising.

In the initial quarter, auto loans and home loans saw significant growth, with a 42% and 52% increase respectively when compared to the previous period. These sectors represent substantial markets that could benefit even more if interest rates were to decrease.

Despite the current HELOC borrowing capacity origination of approximately $160 million at Upstart being relatively small, it represents a colossal potential opportunity in the multi-trillion-dollar market. If Upstart manages to capture even a fraction of the HELOC market and falling rates boost demand, this could turn out to be a significant advantage for shareholders.

A $35 trillion opportunity hiding in plain sight

It’s true that even if mortgage rates significantly drop, homeowners are unlikely to utilize all of their equity or even the majority of it. However, when rates become more favorable, there’s a strong possibility we could witness an increase in HELOC (Home Equity Line of Credit) and refinancing activity amounting to trillions of dollars.

A multitude of businesses, such as banks, stores, home loan providers, and numerous others, could potentially reap benefits from this development. To put it another way, infusing several trillions of dollars into the U.S. economy would be akin to an occurrence that falls under the “high tide raises all boats” concept.

Mentioning the point, Rocket and Upstart are two effectively managed companies that stand to benefit significantly if there’s a resurgence in Americans tapping into their home equity.

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2025-07-17 14:09