UWM posts $229M Q2 profit as spring mortgage originations soar

Publish Date: August 09, 2023

Written by Matt Carter

- Originally published at Inman News - Matt Carter

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The nation’s biggest mortgage lender, United Wholesale Mortgage (UWM), was a well-oiled machine during the spring homebuying season, boosting second-quarter purchase loan originations by 25 percent from a year ago to a record $28 billion.

The Pontiac, Michigan-based wholesaler reported $228.8 million in Q2 net income Wednesday as revenue grew by 4 percent from a year ago, to $587.5 million.

It was an abrupt turnaround from UWM’s Q1 net loss of $138.6 million, which was largely driven by a $337 million write-down in the fair value of the company’s mortgage servicing rights. UWM, which works exclusively with mortgage brokers, also started out the year with its best-ever Q1 for purchase loan production, which totaled $19.2 billion.

“UWM continues to prove that regardless of the interest rate environment, our business model, coupled with the broker channel being the best place for a consumer to get a loan and the best place for a loan officer to work, is a winning formula,” UWM CEO Mat Ishbia said in a statement.

Shares in UWM, which have traded for as little as $2.84 in the past year, hit a new 52-week high of $6.98 in Wednesday morning trading as the company reaffirmed a 10 cents-per-share dividend.

UWM posts record purchase loan originations

UWM also saw its refinancing business, which has been hammered by higher interest rates, rebound by 23 percent from Q1 to Q2. But at $3.8 billion, refinancing volume down by nearly half from a year ago, and by a factor of 10 compared to the boom years of 2020 and 2021 when mortgage rates were at pandemic lows.

All told, UWM originated $31.8 billion in mortgages during Q2, with total gain margin of 88 basis points, down from 99 basis points during the same quarter a year ago.

UWM said Q3 mortgage production is expected to be $26 billion to $33 billion range, with gain margin from 75 to 100 basis points.

The mortgage business has become about doing business with homebuyers, which helped UWM surpass Rocket Mortgage as the nation’s largest mortgage lender last year after launching an aggressive “Game On” pricing initiative.

While Rocket doesn’t break out purchase and refinance volume, in reporting Q2 earnings last week, executives said they’d increased their share of the purchase loan market during the spring homebuying season. But with originations falling 35 percent from a year ago to $22.3 billion, the Detroit-based mortgage giant’s total loan production fell short of UWM’s purchase volume.

LoanDepot, which claims to be the nation’s third-biggest mortgage lender by loans originated, reported a$49.8 million Q2 loss Tuesday, with purchase loan originations down 52 percent from a year ago to $4.55 billion.

“Unlike others that are more reactive to cyclical market conditions, we will continue to be aggressive in our technology and product investments,” Ishbia said. “We are hiring right now, whereas the industry as a whole is continuing to cut back on capacity.”

While UWM has built market share by offering aggressive pricing, the company highlighted recent technology and loan product launches, including:

  • Conventional 1 Percent Down: UWM pays a 2 percent grant up to $4,000 allowing borrowers with less than 80 percent of the area median income (AMI) to put down 1 percent for a total down payment of 3 percent.
  • UWM Portal: An application programming interface (API) that allows mortgage brokers to link their loan origination system (LOS) platform to UWM’s EASE system, streamlining the loan process.
  • PA+: A service that provides a dedicated UWM loan coordinator who work loan officers and their borrowers to “help, scrub, order and send docs.”
  • Expanded jumbo mortgage offerings: UWM says its suite of fixed-rate jumbo mortgages gives brokers “the flexibility to tailor a fixed jumbo loan to best serve each borrower’s needs.”
  • Bank statement loans: Four new bank statement loan offerings to help brokers find the right option for self-employed borrowers.

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