UWM Holdings Corporation, indirect parent of United Wholesale Mortgage (UWM), announces its third quarter earnings, ending September 30, 2024. CEO Mat Ishbia shared that he's pleased with the total origination volume and gain on margin exceeding expectations this quarter, though net income has experienced a notable dip.
UWM’s net income fell significantly from $76.3 million in the second quarter to $31.9 million in the third quarter of 2024, due to a $446.1 million decline in fair value of MSRs and a $226.9 million gain on other interest rate derivatives. Net income was $301 million in the third quarter of 2023.
The lender had an unpaid principal balance of MSRs of $212.2 billion with a weighted average coupon (WAC) of 4.56% as of September 30, 2024, compared to $189.5 billion with a WAC of 4.31% as of June 30, 2024, and $281.4 billion with a WAC of 4.20% September 30, 2023.
However, Ishbia shared, UWM exceeded expectations on total originations and gain-on-sale margin. Total originations for the Pontiac-based lender amounted to $39.5 billion in the third quarter of 2024, compared to $33.6 billion in the previous quarter and $29.7 billion in Q3 2023. Purchase originations came to $26.2 billion in the third quarter, compared to $27.2 billion in the previous quarter and $25.9 billion in third quarter of 2023.
The positive origination results prompted Ishbia to state that “UWM is on pace to have record purchase volume in 2024 despite a generationally slow existing home sales market.”
Total gain margin of 118 bps in Q3 compared to 106 bps in Q2 and 97 bps in Q3 2023. Over the earnings call, Ishbia said he owes the gain on sale to the 10-week refinance resurgence propping up gain on sales margin.
“We exceeded both our volume and margin guidance despite mortgage rates remaining higher than anticipated for most of the quarter," Ishbia stated in the earnings release. "But a dip in rates for just a few weeks pushed us higher than we expected and provided a glimpse into the future. Second, UWM is on pace to have record purchase volume in 2024 despite a generationally slow existing home sales market. The broker channel continues to dominate the purchase market, and our results in Q3 also demonstrate how well UWM and the channel are positioned to capitalize on the inevitable increase in refinance volume when it comes."
Additionally, total equity in the third quarter was $2.2 billion, compared to $2.3 billion in the previous quarter. UWM ended the third quarter of 2024 with approximately $2.5 billion of available liquidity, including $636.3 million of cash and available borrowing capacity under our secured and unsecured lines of credit.
UWM introduced more programs and technology in the third quarter, including Broker X, a structured development program that transforms individuals with no experience into licensed mortgage loan originators (MLOs) in five weeks. This provides brokers with a solution for training and licensing new talent, without needing their own training team. The lender giant also introduced KEEP technology that utilizes AI to send pre-validated refinance opportunities to UWM broker partners.
