With a Federal Reserve rate cut on the tongues of every industry economist, the mortgage market is readying itself for a boom in refinancing. United Wholesale Mortgage is at the forefront of the charge, as executives expressed in their Q2 2024 earnings call on Tuesday, Aug. 6.
Q2 2024 results for UWM include an adjusted net income of $59.8 million, a decrease compared to $141.1 million in Q1 and $175.9 million in Q2 2023. This comes after a mixed bag in 2023, with the company seeing drops from 2022 but maintaining a positive perspective when it came to 2024 and the potential of interest rate cuts.
Despite a loss quarter-over-quarter and year-over-year in net income, as well as losses in total equity and unpaid principal balance of mortgages servicing rights (MSRs), UWM did see significant growth in their loan originations.
Originations for Q2 came in at $33.6 billion, which was a vast improvement compared to $27.6 billion in Q1 and $24.4 billion in Q4 2023, as well as an improvement year-over-year from the $31.8 billion in Q2 2023. In addition, $27.2 billion of this was purchase volume, up from the $22.1 billion seen in Q1.
Beyond their quarterly results, UWM executives stated their main focus, as it was at the end of 2023, is preparing their brokers for a refinance boom in the event of a rate cut.
Mat Ishbia, chairman and CEO of UWM, specifically called out the company’s “continued focus and investment in technology, which put UWM in the broker community in position to handle the significant increases in production that we anticipate when the Fed cuts rate multiple times over the next 12 to 15 months.”
The technology Ishbia mentions is UWM’s TRAC and TRAC+ programs—online systems that allow the company to handle everything throughout title review, closing and disbursement. TRAC+, which was rolled out in Q2, is specifically meant for refinancing.
UWM also rolled out ChatUWM in Q2, which is an AI-powered smart search that provides instant responses on topics including guidelines, matrices, summaries of UWM’s tools and technology and more for mortgage brokers.
These programs and more have allowed their broker channel to “achieve the highest share of industry in the last 15 years,” as stated by Ishbia. He added that he feels the company is “in a much stronger position heading into the next refi market than we were in 2020.”
In terms of loans and what products will prevail in the refinance boom, Ishbia stated that he “still believe(s) the 30-year FRM will be the prevailing product for the foreseeable future,” and that “the Fed cutting rates by even 25 basis points—which everyone in the market expects in September—will move the markets from a perspective of consumer demand, consumer awareness.”
Looking ahead, UWM executives stated they anticipate Q3 2024 loan production to be in the $31 to $38 billion range.
