United Wholesale Mortgage Holdings Corp. — the publicly traded parent of wholesale lender UWM — reported 2021 earnings of $1.6 billion on Tuesday, down more than 53% from the roughly $3.4 billion in 2020.
Meanwhile, for the fourth quarter, the Pontiac, Michigan-based company reported net income of $239.8 million, down more than 80% from the nearly $1.4 billion that she had declared during the same period of 2020.
Still, executives noted it was the company’s 15th consecutive year of profitability and its second most profitable to date, pointing to the boom the mortgage industry has seen in 2020, low interest rates fueling the refinancing activity.
“Our continued focus on speed, service and best-in-class technology is why we continue to deliver these results,” UWMC President and CEO Mat Ishbia said on a call with analysts. “However, our scale is now also an important factor in our success.”
For the full year, UWM reported loan volume – a key market indicator – of $226.5 billion, up 24% from 2020 and a new record for the company, executives said . Purchase origins increased more than 100% to $87.3 billion. Refinancings totaled $139.3 billion, down slightly from $139.6 billion in 2020.
UWM’s profit margin on sale was 1.14% in 2021, compared to 2.49% in 2020.
In the fourth quarter, originations totaled $55.2 billion, up slightly from $54.7 billion in the same period of 2020. This included purchase volume of $24.5 billion, or an increase of 103% compared to the fourth quarter of 2020.
Executives pointed to growth in buying volume, as well as its model of selling loans exclusively through mortgage brokers, as indicators that UWM is well positioned to take advantage of the ongoing transition from the refinancing activity with the purchase of loans.
“Our operations are designed for the buy market, to enable brokerage clients to provide a differentiated solution to US consumers,” said Chief Financial Officer Tim Forrester. “The competitive environment has pushed margins down from the record margins we achieved in the fourth quarter of 2020 and are down slightly from the prior quarter. Even with increased competition, our financial performance remains strong and our return on equity for the quarter was impressive.”
The company said it was again the largest wholesale mortgage lender in the United States by closed loan volume, with about a third of the wholesale channel’s market share.
“As the industry navigates rising rates and low housing inventory, UWM is well positioned to succeed by doing what we do best – proving that a mortgage broker is the fastest, most affordable option. easiest and most affordable for borrowers,” Ishbia said in a statement. “With continued channel growth and industry-leading elite service, we are well on our way to achieving our goal of becoming the nation’s leading mortgage lender.”
The company said it expects first-quarter production to be between $33 billion and $42 billion.
UWM had total equity of $3.2 billion at the end of 2021, compared to $2.4 billion at the end of 2020. For the year, the company repurchased nearly 11.5 million shares Class A common stock for $81.6 million, at an average price per share of $7.10. .
Tuesday marked the second time the mortgage lender released its annual results as a publicly traded company, following its January 2020 listing on the New York Stock Exchange following a $16.1 billion merger. with a blank check company.
Shares of UWM Holding Corp. closed at $4.34 per share on Monday. It was trading down around 3% on Tuesday afternoon.
Meanwhile, Crosstown rival Rocket Cos. last week reported net income of more than $6 billion in 2021, down more than 35% from 2020. The largest mortgage originator The country closed a record $351 billion in loans last year, an increase of nearly 10% from 2020.
Another Michigan-based mortgage lender, Ann Arbor’s Home Point Capital Inc., posted a profit of $1.19 million in 2021, down 73% year-over-year, with volume of $96.203 billion. dollars closed, up 55%.
UWM and Rocket both saw their stocks plunge ahead of their earnings reports amid a broader slowdown for U.S. mortgage lenders due to rising mortgage rates and a drop in refinancing applications.
For the week ending Feb. 18, mortgage applications fell 13.1% from the previous week, according to survey data released by the Mortgage Bankers Association last week.
Mortgage applications fell to their lowest level since December 2019 and the 30-year fixed mortgage rate climbed to 4.06%, almost a percentage point higher than a year ago, a reported the organization.
UWM will pay a cash dividend of 10 cents per share on outstanding Class A common stock to shareholders of record at the close of business on March 14. The dividend is payable on April 11.