Pontiac-based United Wholesale Mortgage did less business in the first quarter as mortgage rates rose, although still had $453 million in profit, according to the company’s first quarter earnings released Tuesday morning.
Mortgage business volume dropped 26% to $38.8 billion for UWM compared with the same period a year ago, and mortgage refinancing activity fell to 51% of the company’s overall business versus 75%.
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 overall mortgage industry is experiencing a slowdown as interest rates have risen in recent months, resulting in buyouts and layoffs at many lenders, including local nationally ranked lenders Rocket Mortgage and Flagstar Bank.
“This quarter, we demonstrated that our business can continue to be profitable in significantly different market conditions than what we’ve seen over the past two years,” UWM CEO Mat Ishbia said in a news release. “We earned this position by building a business over the past 36 years that can take advantage of what the market provides.”
Ishbia, who was scheduled for an earnings call with Wall Street analysts Tuesday, has said that UWM hasn’t had to do layoffs. However, the number of employees dipped to 7,830 as of Dec. 31, according to the company’s Securities and Exchange Commission filings.
UWM had employed more than 9,000 people as of last summer, the company said at the time.
For the year, mortgage originations in the U.S. are forecast to drop 36% from 2021 levels to $2.5 trillion, according to the Mortgage Bankers Association, with refinancings falling to 28% of the market by year’s end, compared with nearly 60% for all of last year.
The impact of rising mortgage rates on UWM’s business could be more acute in the current quarter. The company says it anticipates 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 scheduled to release its first quarter earnings later Tuesday.