The spring home-buying season fueled a fiery second-quarter performance for United Wholesale Mortgage (UWM), as the lending giant tallied a significant jump in loan originations.
In its latest earnings report, UWM posted $31.8 billion in total loan-origination volume between April and June, compared to $22.3 billion in the previous quarter and $29.9 billion in the second quarter of last year.
“UWM continues to prove that regardless of the interest-rate environment, our business model, coupled with the broker channel being the best place for a consumer to get a loan and the best place for a loan officer to work, is a winning formula,” said Mat Ishbia, chairman and CEO of UWMC, in a Thursday statement.
Against the backdrop of surging mortgage rates that peaked at 6.79% last quarter, UWM reeled in $28 billion from purchase originations, up from $22.4 billion in the second quarter of 2022.
Though the refinance market has remained subdued amid market shifts in the mortgage lending industry, UWM saw a quarterly bump in its refi originations from $3.08 billion in Q1 to $3.8 billion last quarter. Annually, that is still more than half of where the lender’s refi’s were last during the same period the previous year.
Here is a further breakdown of UWM’s finances at the end of Q2 2023:
- UWM saw a total gain margin of 88 basis points between April and June, compared to 92 bps in Q1 and 99 bps in Q2 last year.
- The adjusted EBITDA was $125.4 million in 2Q23 compared to $141.0 million in Q1 this year and $95.0 million in Q2 2022
- UWM reached total equity of $2.9 billion compared to $2.9 billion in the first quarter of the year and $3.2 billion in the same quarter last year.
- UWM ended Q2 with approximately $2.8 billion of available liquidity, including $0.9 billion of cash and self-warehouse, and $1.9 billion of available borrowing capacity (which includes $1.4 billion under lines of credit secured by agency and Ginnie Mae MSRs) and $500 million under an unsecured line of credit.
While he exuded optimism for his company during a recent conference call, Ishbia acknowledged that the mortgage industry had faced its share of hurdles over the past 18 months.
“While other companies are exiting the market, losing money, shrinking and laying people off, we are the exact opposite,” he said.
Ishbia also stated, “Our business model succeeds in the up markets and the down markets. This is the ultimate down market, and we are still winning. I can’t wait for the big market to come. It’s going to come. I don’t know when, as I said, but we are prepared at UWM, and that’s why we are different than everyone else.”
Despite posting net losses in the first quarter of the year, UWM returned to the black, reporting a net income of $228.8 million in Q2. Annually, the lender’s profits outperformed its $215 million net income in the same period last year.
As market conditions have shifted this year, Ishbia noted that UWM is poised to maintain its investment in technology and products. At the same time, the company highlighted several launches that have taken place in recent months.
That includes a company’s “Conventional 1% Down” product that allows borrowers with less than 80% of their area median income to qualify. Those eligible can put down 1% of the downpayment while UWM covers a 2% grant up to $4,000.
The company also rolled out Expanded Jumbo Offerings, which provides a “suite of fixed-rate jumbo products” to give brokers flexibility when tailoring a fixed jumbo loan for their borrowers.
Looking toward the third quarter, UWM expects its production to range between $26 billion and $33 billion, with a gain margin from 75 to 100 basis points.
