United Wholesale Mortgage saw $215 million net income amid slowing market
Pontiac-based United Wholesale Mortgage has been staying profitable during the current downturn in the U.S. mortgage market and moderately reducing its employee headcount.
The nation's No. 2 mortgage lender by volume, UWM on Tuesday reported $215 million in net income, or profit, during the second quarter. That was down from $453 million in the first quarter, although higher than the company's $139 million net income in the second quarter of 2021, back when mortgage rates were still under 3% and the housing market was booming.
Total mortgage origination volume for UWM was $29.9 billion last quarter, down 23% from the first quarter of the year and 50% below the second quarter of 2021.
About 75% of UWM's business last quarter was for home-purchase loans with the other 25% refinancings. Back in early 2021, those ratios were essentially flipped as UWM and other lenders enjoyed the tail end of a mortgage refinancing boom.
The company does not report total revenue figures.
While UWM has avoided mass layoffs in the recent mortgage market downturn, its employee headcount was down to about 7,000 as of June 30, compared with 7,830 at the end of last year and roughly 9,000 last summer.
During an earnings call Tuesday morning, some analysts congratulated UWM CEO Mat Ishbia for posting strong earnings during a challenging quarter for the mortgage industry.
Ishbia said his company is "overstaffed by design" at the moment so that it can more easily shift to higher volumes of business in the future, faster than competitors can.
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On another front, UWM in late June undertook its "game on" pricing initiative that will lower its prices and profit margins during the current quarter with the goal of growing market share.
“We’ve been waiting for this time in the industry where rates went up," Ishbia said. "They went up fast, everyone else was kind of caught doing the refi game and the merry-go-round with doing the refinance all day — that doesn’t work for a long-term strategy, and you’re seeing it right now.
"That’s why we’ll continue to take market share ... and we'll be positioned, not only for a great year this year, but ’23, ‘24 and ’25."
The entire U.S. mortgage industry is now in a down cycle, with mortgage originations forecast to drop 40% this year from 2021 levels, according to the Mortgage Bankers Association, because of higher mortgage rates and fewer home sales and refinancings.
Detroit-based Rocket Companies, formerly known as Quicken Loans, recently reported a steep decline in revenue during the second quarter with net income down to $60 million.
Mortgage rates were on the rise throughout the second quarter and neared 6% in June, although they have since fallen back to an average of about 5% for a 30-year, fixed-rate mortgage, according to government-backed mortgage enterprise Freddie Mac.
In addition, sales of existing U.S. homes have been declining each month this year compared with last year, according to the National Association of Realtors.
Ishbia began Tuesday's earnings call with a moment of silence for former UWM CFO Timothy Forrester, who died last month at age 55 after a battle with cancer.
Contact JC Reindl at 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
This article originally appeared on Detroit Free Press: United Wholesale Mortgage saw $215M net income amid slowing market
