What happened

Shares of Rocket Companies (RKT 5.28%) fell today after the mortgage and financial services company reported first-quarter earnings that were lower than analysts' average estimates. 

The stock was down by as much as 11.5% today and had fallen 4.6% as of 2:36 p.m. ET. 

So what 

Rocket's sales of $2.7 billion beat out Wall Street's average estimate of $2.2 billion for the quarter but were down 41% from the year-ago quarter. 

Graphs on a screen.

Image source: Getty Images.

That sales slump surely gave some investors pause this morning, and the company's earnings didn't help ease their worry.

Rocket reported non-GAAP (adjusted) earnings of $0.15 per share, which was down significantly from $0.91 per share in the year-ago quarter and also fell short of analysts' consensus estimate of $0.19. 

On the company's earnings call, Rocket CEO Jay Farmer noted that rising mortgage interest rates are impacting the company and said that it "obviously creates challenging conditions for our industry." 

The company's closed loan origination volume was nearly $54 billion in the first quarter, down nearly 48% from $103 billion in the year-ago quarter. 

And things don't look much better for the second quarter. Rocket's management said that closed loan origination volume will be in the range of $35 billion to $40 billion -- which would represent a 55% year-over-year decrease at the midpoint of guidance. 

Now what 

Rising mortgage rates are slowing demand for new mortgages and mortgage refinancing -- two segments that have boomed over the past two years when rates were low. 

And as the Federal Reserve is poised to raise the federal funds rate throughout 2022 in order to tamp down rising inflation, it's likely that mortgage rates will continue to increase. That's bad news for Rocket, and investors are taking notice today.