The nation’s biggest wholesale mortgage lender, United Wholesale Mortgage, posted its best quarter ever for total loan originations, driven by record purchase loan volume and a bump in mortgage refinancings.
At $329.9 million, third quarter net income was up 138 percent from the previous quarter, but down 77 percent from the $1.45 billion posted during the third quarter of 2020, when the refinancing boom drove higher profit margins.
Total gain margin for the quarter was 91 basis points, down 70 percent from the 318 basis points the company earned a year ago when 78 percent of the loans it originated were refinancings. UWM said it expects fourth quarter loan production to be in the range of $52 to $60 billion, with total gain margin between 85 and 105 basis points.
After the earnings release, shares in UWM climbed nearly 5 percent from Monday’s close of $7.15 in early trading, before giving up some of those gains. In the last year, shares in UWM have traded for as little as $6.25 and as much as $14.38.
UWM originated a record $63 billion in mortgage loans during the three months ending Sept. 30, with homebuyers who were sent to the company by mortgage brokers taking out $26.5 billion in purchase loans.
It was the Pontiac, Michigan-based wholesale lender’s best quarter ever for purchase loan originations, which were up 10 percent from the previous quarter and 119 percent from a year ago. Purchase loans accounted 42 percent of UWM’s total loan originations, up from 22 percent a year ago.
UWM mortgage originations by type
![](https://assets.inman.com/wp-content/uploads/2021/11/UWM-purchase-and-refi-Q3-2021.png)
Source: Data from UWM regulatory filings compiled by Inman.
UWM also managed to grow refinancing volume for the first time in 2021, as average rates on 30-year fixed-rate mortgages dipped below 3 percent in July and remained there for most of the quarter. At $36.5 billion, refinancing volume was up 4 percent from the second quarter, but down 13 percent from a year ago.
![Mat Ishbia](https://assets.inman.com/wp-content/uploads/2021/04/Mat-Ishbia-2019-150x150.jpg)
Mat Ishbia
“As the mortgage market shifts from heavy refinance to more purchase, UWM and the wholesale channel are uniquely positioned to best serve the needs of the American consumer as a team,” UWM CEO Mat Ishbia said in a statement. “Brokers, by nature, are embedded in their local housing markets and UWM provides them elite technology, speed, and service, especially on purchase loans.”
UWM in September launched a new self-service platform for brokers, BOLT, that automatically classifies and extracts information from documents, allowing mortgage brokers to get initial approvals for qualified borrowers in 15 minutes.
The company is also offering a new in-house appraisal capability, UWM Appraisal Direct, giving brokers the option of bypassing appraisal management companies.
UWM cited its new mortgage search engine, The Source, as a third technology launched during the third quarter to speed loan processing. The search engine learns from past searches and lets brokers create personalized hubs to customize and track the information most important to them.
With the Federal Reserve starting to withdraw its support for mortgage markets this month, interest rates are expected to rise next year, putting an end to a refinancing boom that’s generated big profits for lenders.
Purchase lending projected to overtake refinancings in 2022
![](https://assets.inman.com/wp-content/uploads/2021/10/Projected-mortgage-originations-Fannie-Mae-Oct-2021.png)
Mortgage refinancing and purchase loan originations by year. 2021 and 2022 are projected. Source: Fannie Mae Economic and Housing Outlook, October 2021.
Economists at Fannie Mae project that mortgage refinancing volume will drop by 46.7 percent in 2022, to $1.318 trillion. But rising home prices could help fuel purchase loan volume, which is expected to grow by 9 percent in 2022, to $2.012 trillion.
The anticipation of a dramatic shift from refinancings to purchase loans has mortgage lenders focused on growing their business with homebuyers.
UWM rival Rocket Mortgage, the nation’s biggest mortgage lender, also claimed record third quarter purchase loan originations. Although Rocket Mortgage did not break out purchase and refinancing volumes when reporting third quarter earnings last week, the company’s $88.05 billion in total origination volume was essentially unchanged from a year ago, when it closed $88.98 billion in loans.
LoanDepot says it’s also making a successful pivot and growing its purchase loan business, providing $11 billion in financing to homebuyers during the third quarter. Purchase loans represented a record 34 percent of loanDepot’s third quarter mortgage originations, up from 19 percent during the first three months of the year.
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