Mortgage Companies Want In on the IPO Boom. Investors Aren’t Convinced.

It hasn’t worked out quite the way all the companies were hoping. Two lenders that have gone public this year, Home Point Capital Inc. and loanDepot Inc., considerably scaled back their offerings. Another lender, AmeriHome Mortgage, abandoned its IPO plans and instead said it would sell to a bank. Shares of Caliber Home Loans Inc., which were expected to list in October, have yet to hit the public market.

“The average investor is not convinced a mortgage company is a great bet as far as owning stock in it,” said

Guy Cecala,

chief executive of Inside Mortgage Finance, an industry research firm. “It’s a cyclical business, and they’re not sure what’s going to happen.”

With home prices soaring, many families are getting locked out of home buying—and some buyers who rushed in are regretting they did. Some of the borrowers who have been allowed to pause their mortgage payments during the pandemic will struggle to get back on track when their relief programs end. And slightly higher mortgage rates have weighed on refinance and purchase activity in recent weeks.

Many investors are wary of such headwinds, analysts said, and realize the rate of profit growth reached by mortgage lenders over the past year is likely unsustainable.

“The market got a bit ahead of itself on some of these names,” said

Bose George,

an analyst at Keefe, Bruyette & Woods.

Mortgage origination volume by top lenders

Mortgage lenders originated a record $3.69 trillion worth of mortgages last year, according to the Mortgage Bankers Association. With the 30-year mortgage rate near 2.97%, between 15.2 million and 16.7 million Americans could lower their monthly mortgage payments through a refinancing, according to mortgage-data firm Black Knight Inc.

Still, total originations are expected to fall to $2.96 trillion in 2021. Though that would still be one of the best years on record, it would also mean a 20% decline.

The amount lenders earn when they sell each loan has also started to drop. The median gain-on-sale margin for mortgage banks and nonbank lenders dropped from 2.74% in the third quarter to 2.14% in the fourth quarter, according to Piper Sandler Cos. Analysts expect per-share earnings to fall in 2021 at Home Point,

Guild Holdings Co.

GHLD 0.62%

and

Rocket

RKT 9.80%

Cos.

When Home Point and loanDepot listed this year, investors were willing to buy fewer shares—and paid less for them—than the lenders had anticipated.

LoanDepot raised $54 million in its listing, just more than the roughly $50 million in compensation CEO

Anthony Hsieh

brought home in 2020. Earlier this month, the company had targeted raising between $285 million and $315 million.

In January, Home Point shareholders raised $94 million, down from the $250 million proposed earlier.

The lenders that have gone public or are trying to are all nonbanks, which don’t have the deposits or diverse business lines that give banks a steady source of funding. Though nonbanks now issue the bulk of U.S. mortgages, most of them are little known outside the world of housing finance.

The exception is Rocket, which owns Quicken Loans. When Rocket made its stock-market debut in August, it was the first for a mainstream mortgage company since 2013, according to Inside Mortgage Finance. Other lenders soon announced they would follow suit. The company priced at $18 a share. The stock soared to more than $31 in its first month. On Friday it closed at $21.85, up 9.8% on the day.

The listing price was disappointing for Rocket executives, who consider the firm a technology company and were disappointed when it didn’t price as highly as one, according to a person familiar with the matter.

Rocket trades at about 10 times its projected earnings over the next 12 months, according to FactSet. Information-technology firms in the S&P 500 trade at about 26 times projected earnings.

Share performance of other home lenders has been mixed.

UWM Holdings Corp.

UWMC -0.92%

shares have fallen about 34% since United Wholesale’s SPAC merger closed in late January.

LoanDepot, Guild and Rocket are all up since they went public.

A handful of deals announced last fall have yet to come to market. Caliber, which delayed its listing last October amid market turbulence, is also considering a sale, according to a person familiar with the matter.

AmeriHome, which agreed this month to sell itself to

Western Alliance Bancorp.

WAL -2.83%

, had also originally planned to go public last fall.

“The value that we create…as a correspondent lender with very stable and consistent earnings and attractive return really was just completely undervalued and continues to be undervalued in the public market,” AmeriHome CEO

Jim Furash

said in an interview.

—Peter Rudegeair contributed to this article.

Write to Orla McCaffrey at orla.mccaffrey@wsj.com