Home Fixed interest United Wholesale Mortgage Profits Fall as Interest Rates Rise

United Wholesale Mortgage Profits Fall as Interest Rates Rise

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Pontiac-based United Wholesale Mortgage did less business in the first quarter as mortgage rates rose, though it still posted a profit of $453 million, according to the company’s first-quarter results. published Tuesday morning.

Mortgage business volume fell 26% to $38.8 billion for UWM from the same period a year ago, and mortgage refinance activity fell to 51% of overall UWM activity. the company against 75%.

After:Mortgage layoffs and takeovers escalate in Metro Detroit

Net income, or profit, for UWM was $453 million for the quarter, down from $860 million a year earlier. The company’s profit margins were 0.99%, down from 2.19% in the first quarter of 2021.

The mortgage industry as a whole is experiencing a slowdown, with interest rates rising in recent months, resulting in buyouts and layoffs from many lenders, including nationally ranked local lenders Rocket Mortgage and Flagstar Bank.

The average interest rate on a 30-year fixed-rate mortgage hit nearly 5.2% last week, the highest level since 2010, according to the Mortgage Bankers Association.

“This quarter, we have demonstrated that our business can continue to be profitable in very different market conditions than we have experienced over the past two years,” UWM CEO Mat Ishbia said in a statement. Press. “We have earned this position by building a business over the past 36 years that can take advantage of what the market offers.”

Ishbia, who was due to have an earnings call with Wall Street analysts later Tuesday morning, said UWM did not have to lay off. However, the number of employees fell to 7,830 as of Dec. 31, according to company filings with the Securities and Exchange Commission.

For the year, U.S. mortgages are expected to fall 36% from 2021 levels to $2.5 trillion, the association says, with refinances falling to 28% of the market by the end of the year, compared to almost 60% for the whole of last year. .

The impact of rising mortgage rates on UWM’s business may be more acute in the current quarter. The company says it expects lower mortgage volume and even tighter profit margins.

The average interest rate on a 30-year fixed-rate mortgage hit 5.27% last week, according to government-backed Freddie Mac, the highest in a decade.

Dan Gilbert’s Detroit-based Rocket Companies was due to report first-quarter results later Tuesday.

ContactJC Reindl to313-222-6631 or [email protected]. Follow him on Twitter @jcreindl. Learn more about companies and sign up for our business newsletter.