UWM's Mat Ishbia eager for next mortgage refinancing boom

Pontiac-based United Wholesale Mortgage saw profits drop during the second quarter, although CEO Mat Ishbia is salivating about a future bonanza for the company if lower interest rates bring about the next mortgage refinancing boom.

The No. 1 mortgage lender in the country by volume, UWM reported $76.3 million in net income for the quarter ending June 30, compared with $180.5 million in the first quarter and just under $229 million in the second quarter of 2023.

The total volume of UWM's mortgage originations was $33.6 billion, up from $27.6 billion in the first quarter and $31.8 billion in the second quarter of 2023. About 81% of the latest quarter's mortgage volume was for home purchase loans; the rest were refinancings.

When speaking with investors during Tuesday morning's earnings call, Ishbia said that UWM, in contrast to some competitors, did not resort to layoffs during the mortgage industry's slowdown since the last refinancing boom, and therefore is in a good position to capitalize on future drops in mortgage rates that he thinks will prompt a flood of refinancing business.

Because most of the money in refinancing booms is made during the first six months, it is crucial to have a trained and ready workforce that can handle such a surge in business, he said.

UWM currently employs roughly 8,000 people at its Pontiac campus, Ishbia said, which is up from the company's last officially reported headcount of 6,700 as of Dec. 31.

“To put it bluntly, UWM and the broker community are thriving and are ready for when rates drop — and they will drop," Ishbia said.

There has been much speculation lately that the Federal Reserve could act to lower interest rates in coming months amid signs of a slowing economy. That could lower yields on 10-year Treasury bonds, which directly correlate to the interest rates on 30-year, fixed rate mortgages.

Ishbia said he anticipates multiple rate cuts over the next 12 to 15 months by the Federal Reserve.

“If the 10-year goes down substantially, that is going to happen to everybody," Ishbia said of mortgage lenders. "Everyone’s going to get flooded with refinances because there is trillions of dollars of loans in the 7%, 6.5% to 8% range. And so if all of the sudden 30-year fixes are 5.5%, 5.75% — man, people are going to refinance.

"And when the Fed lowers rates, people are going to think about refinancing," Ishbia said.

UWM rival Detroit-based Rocket Companies last week announced its own second-quarter earnings, including a quarterly profit of $178 million.

More:Dan Gilbert's Rocket Companies stayed profitable in second quarter

UWM and Rocket both experienced full-year losses for 2023 amid the slowdown in the mortgage business from high mortgage rates.

Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on X @jcreindl