United Wholesale Mortgage reported first quarter earnings as home prices surge. United Wholesale Mortgage CEO Mat Ishbia joins Yahoo Finance Live to discuss.

Video Transcript

ZACK GUZMAN: been a big boom in real estate. Probably don't need to remind you about that one. But when it comes to mortgages, interesting to see the battle playing out on that side of the business, as things heat up here too. We got the earnings update earlier from America's number one wholesale mortgage lender, that being United Wholesale. And we got the update there when it comes to net incomes, $860 million. That was a 42 times increase over quarter one in 2020, to hit $20.3 million. Well, that was what it was in 2020. But loan origination came in weaker than what the company had guided for. $49.1 billion missed UWM's guidance of $52 billion to $57 billion.

But for more on the growth that they are seeing there in this, of course, the first quarter they reported since they came out in what was, at the time, the largest ever SPAC deal. Happen to be chatting, once again, with Matt Ishbia, United Wholesale Mortgage CEO, alongside Yahoo Finance's Brian Sozzi here.

And Matt, I mean, we talk about that jump from your first quarter over last year. It's quite noticeable. Hard not to notice that kind of jump. Talk to me about what you're seeing right now in the mortgage space and the battle on the wholesale side. MATT

MATT ISHBIA: Yeah. No, it was obviously a fantastic first quarter, really excited about it, and excited to continue to grow our business here. And so what's really going on in the mortgage industry is obviously rates have ticked up a little bit. And so we're excited here at UWM. We obviously differentiate with the purchase business. And at the same time, consumers need to shop for a mortgage. Because rates aren't as low as they were before, so you've got to go to findamortgagebroker.com, find a local person to shop.

And we're proud of that. We're excited about it. Where a lot of our competitors think, you know, tightening mortgage world, we're going to do less business. We actually are going to do more business in the second quarter than we did in the first quarter. And we're excited to continue to grow here at UWM.

BRIAN SOZZI: Matt, there's a lot of focus right now, at least in the market, in terms of investors, on the trajectory of gain on sale margins for your industry, under some pressure here. When should investors expect that would bottom? And what's causing that?

MATT ISHBIA: Yeah, you know, it's natural. Mortgage industry, margins go up and down. And they always come from all-time highs, which they just were at, to all-time lows, and then they settle back in. And so we're expecting to settle back into more normalized numbers. But at the same time, with our costs to originate and our ability to deliver lower rates to consumers, we're going to take advantage of that opportunity and really deliver that and grow our business.

Where everyone else is worried about margins are condensing and they're doing less business, margins condense a little bit, but we'll do more business and take market share. And then when margins normalize, we'll have even bigger earnings down the road. But right now, we'll take advantage of the market share and grow towards being the number one overall mortgage company, not just the number one wholesale lender.

BRIAN SOZZI: Now we haven't talked for a little bit. Maybe you can explain what is going on with Rocket. There is a little bit of a dust up there. Can you explain what's happening and what's been the end result?

MATT ISHBIA: Yeah. No, there's no dust up. It's, you know, we're competing. We're trying to grow our business. And I think they're trying to grow their business. The difference between us and Rocket is Rocket goes direct to consumers and they charge higher rates than what brokers can offer consumers through us, at UWM, and other wholesale lenders. And so it's just educating consumers. Instead of seeing a commercial and you go towards the commercial, you go towards a findamortgagebroker.com, find a local person. And you know, that caused a little dust up. Because we're growing and I think they guided to go down 15% to 20% in the second quarter because they're plus 90% plus refinance. And we're not. We're much more purchase focused and we're going to grow.

And so, you know, if that creates a dust up, I have no hard feelings. I respect what Dan Gilbert has done over there. They done a great job, built a great business. And we're going to try to continue to grow here at UWM.

AKIKO FUJITA: I sense a lot of competition there. I mean, you've talked about competitors a few times already in this conversation. Rocket is one. Of course, you've got another one like better.com. When you look at the demand in the market, I wonder if you think there is enough to support all of the players?

MATT ISHBIA: Absolutely there is. It just depends on what their business model is, you know. So when we came out with our roadshow back in September and raised money to become a public company, it was about, hey, we're less cyclical than these other companies. Better and Rocket, both great companies, but they're very heavily focused on refinance. And that's obviously great when rates are really low. But you know, there's a lot of cycles in the mortgage industry. And so we're kind of-- we didn't think the cycle would come this quick, but now we start to see rates tick up a little bit. And you'll start to see purchase volume, who's actually helping consumers buy homes. And I think that's where UWM differentiates.

ZACK GUZMAN: Yeah. Do you think it was mostly kind of-- what was it that maybe had you come in below the guidance for the quarter? Was it more to do with, you know, refinancing on existing mortgages or kind of the uptick in mortgage rates maybe cooling things off a bit? What was maybe one thing you'd tease out and how you see that impacting things moving forward?

MATT ISHBIA: Yeah. So we're excited about our guidance for Q2. We're going to do more business than we did in Q1. Q1, you know, we came out with our guidance early. Rates went up quite quickly in February and March. The difference between us and everybody else is we closed loans in 16, 17 days. The market takes 50 days. So most of my competitors were closing loans that they originated in December and January through February and March. They didn't feel the uptick of rates. We did. And we braced for it. And now we rolled out some different things, and we're going do more business.

And so we feel really good about the first quarter. Excellent quarter, best first quarter in company history by a lot. And we're expecting to have the best second quarter in company history right now.

ZACK GUZMAN: All right. Matt Ishbia, United Wholesale Mortgage CEO, appreciate you coming on here to chat with us once again. And our thanks to Yahoo Finance's Brian Sozzi as well.