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The CEO of the nation’s biggest mortgage lender says the company is hiring “hundreds” of new employees after funding a record $22.1 billion in purchase loans during the first quarter — and upping its profit margins on those loans.
While purchase loan volume was up 15 percent from a year ago, United Wholesale Mortgage’s bottom line also got a lift from a 78 percent jump in refinancing volume to $5.5 billion, the company said in reporting first-quarter results Thursday.
Factoring in the higher profit margin on those loans — gain on sale margin was up 16 basis points, to 1.08 percent — helps explain UWM CEO Mat Ishbia’s optimism on a call with investment analysts.
“We’re hiring hundreds of new team members preparing for the future and the opportunity,” Ishbia said. “There’s a great buzz on our campus I wish all of you guys could feel.”
Jobs posted on UWM’s website include openings for loan underwriters, risk analysts, IT specialists, system engineers and product developers.
Whether mortgage rates come down tomorrow, 6 months from now, or a year from now, “We will be ready at UWM to capitalize on the opportunity,” Ishbia said. “That’s been a big part of our hiring strategy … we’re ready for the volume to pick up significantly.”
UWM’s Q1 net earnings of $180.5 million were aided by the sale of $70 billion in mortgage servicing rights (MSRs) and a $141 million markup in the value of the $230 billion in MSRs it retained.
By another measure that excludes fluctuations in the value of UWM’s MSRs — adjusted earnings before interest, tax, depreciation and amortization (EBITDA) — UWM’s $101.5 million in Q1 adjusted EBITDA earnings were up from $99.6 million in Q4 2024, but well short of the $141 million in adjusted EBITDA posted in Q1 2023.
UWM share price recovers from short attack
Source: Yahoo Finance.
Shares in UWM, which in the last year have traded for as little as $4.49 and as much as $7.75, gained 5 percent after Thursday’s earnings released, closing at $7.51.
UWM’s share price had previously touched a 52-week high of $7.75 on March 25. A week later, Hunterbrook Media, a newly created media company affiliated with a hedge fund that’s taken a short position in UWM, published a scathing report critical of UWM’s business practices.
Ishbia, who last month suggested that UWM’s fiercest rival, Rocket Mortgage, and its founder, Dan Gilbert, were behind the short attack, did not mention the report, or Rocket Mortgage, on Thursday’s earnings call.
(Rocket denies it had anything to do with the short attack, and UWM has defended the business practices questioned by Hunterbrook Media, including UWM’s prohibition on mortgage brokers who want to do business with it from sending loan applications to rivals Rocket Mortgage or Fairway Independent Mortgage.)
Shares in UWM, which dipped below $6 after the publication of the Hunterbrook Media report, have now regained much of the value they’d lost after the short attack, touching a high of $7.62 Thursday.
Mat Ishbia
“I don’t think it’s reported in the mainstream media, but we’ve seen a really strong purchase year so far,” Ishbia said. “Not just our company, but in the market. I think inventories are up. That’s not a fun news story because it’s positive, so a lot of people naturally don’t talk about it. But inventories are up, housing values are strong, and there’s a lot of first-time homebuyers out there in the market.”
UWM Q1 originations surpass Rocket by 37%
At $27.6 billion, UWM’s total Q1 mortgage origination volume was up 24 percent from a year ago, besting rival Rocket Mortgage’s $20.2 billion in mortgage production by 37 percent.
While UWM has had better quarters for purchase loan production — it originated $28 billion in purchase loans during Q2 2023 — the company’s previous record for Q1 purchase loan originations was $19.2 billion, set last year.
UWM surpassed Rocket as the nation’s largest mortgage lender in 2022, as rising interest rates put an end to the mortgage refinancing boom and UWM aggressively cut prices to attract homebuyers. UWM’s “Game On” pricing initiative brought its rates down by 50 to 100 basis points (0.5 to 1 percentage point) across all loan types.
UWM has since increased its profit margins and will continue to do so when mortgage rates come down.
Ishbia said, “75 to 100 [basis points] is kind of the bottom of the barrel wholesale margins, and now it’s up to 85 to 110 range and I see that going up when rates drop further.”
In a purchase market, “price is less relevant” to borrowers, Ishbia said. “It’s more about can you take care of the client, make it fast, easy, simple, get them in the house on time, and then, obviously, be affordable. And so those are all the things that we’re working on.”
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