Real Estate

United Wholesale Mortgage Purchase Loan Business Up 288%

United Wholesale Mortgage racked up record purchase loan originations during the second quarter of 2021 as the refinancing boom continued to wane, helping the company boost overall loan production to a new high.

All told, Pontiac, Michigan-based UWM originated $59.2 billion in loans during April, May and June, up 21 percent from the first quarter of the year and 90 percent from a year ago.

But the growing share of less profitable purchase mortgages in the mix took a bite out of net income, which was down 74 percent from a year ago, to $138.7 million.

UWM mortgage originations by type

Source: Data from UWM regulatory filings compiled by Inman

Purchase loan originations nearly doubled from the first quarter to the second, to a record $24.1 billion. That represents a 288 percent jump from a year ago, when the pandemic dented home sales. Purchase loans accounted for 41 percent of UWMs second quarter loan volume, up from 22 percent during the last three months of 2020.

At 81 basis points, total gain margin was down 67 percent from the 243 basis points the company earned a year ago, when 80 percent of the loans it originated were refinancings. That’s what UWM expects margins to look like going forward, as well, offering guidance that third quarter loan production should be in the range of $57-$62 billion, with expected gain margin between 75 and 100 basis points.

UWM CEO Mat Ishbia emphasized the dramatic growth in purchase loan volume, saying the company’s relationships with mortgage brokers will help it stay profitable as mortgage rates increase and refinancings dry up.

Mat Ishbia

United Wholesale Mortgage CEO Mat Ishbia

“As we have said previously, UWM is built to succeed not only when there is a refi boom and margins are at record highs, but also when margins are compressed and purchase business drives the volume,” Ishbia said in a statement. “Consumers are increasingly coming to realize that working with a broker is the cheapest, fastest and easiest way to get a mortgage, and as long as the wholesale channel flourishes, so will UWM as the undisputed leader and champion of the channel.”

Since it’s not a retail lender, UWM is not a household name with many consumers. But it was second only to Wells Fargo as a provider of purchase loans in 2020.

UWM rivals Rocket Mortgage — the nation’s biggest mortgage lender — and loanDepot also reported record purchase loan originations during the second quarter.

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