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United Wholesale $$$; Waterstone hires; Where prices are rising 🤔

By August 17, 2021 No Comments

UWM CEO on recent earnings: “Our best quarter of all-time”

United Wholesale Mortgage Holdings Corp. on Monday recorded a net income of $138.7 million in the second quarter, down 74% year-over-year following last year's booming housing market amid the COVID-19 pandemic. (The Detroit News, paywall.) 

Despite that, the Pontiac mortgage giant surpassed its expectations, decreasing its gap with crosstown rival Rocket Mortgage with a record $59.2 billion in originations for the April-to-June quarter. UWM had forecasted the total would be between $51 billion and $55 billion. Still, shares were falling 2.7% in pre-market trading Monday morning.

UWM CEO Mat Ishbia has set his eyes on surpassing Rocket Mortgage by 2024 as the country's largest direct mortgage lender. UWM expects third-quarter originations will fall between $57 billion and $62 billion. Rocket is predicting closing between $82 billion and $87 billion in loans.

In the second quarter, loans for home purchases jumped to represent 41% of UWM's mix for the quarter to a record $24.06 billion, up almost three times year-over-year. The rest of the $35.15 billion came from refinances, a 41% increase, as homeowners took advantage of historically low interest rates.

“We demonstrated the strength of our business by delivering our best quarter of all-time in terms of overall production and purchase production,” Ishbia said in a statement. “As we have said previously, UWM is built to succeed not only when there is a refi boom and margins are at record highs, but also when margins are compressed and purchase business drives the volume.”

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With mortgage banking slowing down, Waterstone hires new head of sales

After a remarkable performance in the last year and a half, the earnings of Waterstone Financial will likely trend downwards through the end of 2022, the company said earlier this week. 

Mortgage banking income, which makes up an overwhelming majority of total revenue, will likely decline towards a more normal level amid a stable interest rate environment. 

The country's mortgage market has proven more resilient than previously expected.At the end of December 2020, the Mortgage Bankers Association expected mortgage volumes to normalize over a couple of years as refinancing will become less lucrative in a stable-to-rising interest rate environment. 

However, the refinancing volume has fallen less sharply than expected so far this year, Sheen Bay research said on Seeking Alpha

In related news, Waterstone Mortgage has named Rich Harkwell as the company’s new chief sales officer, effective immediately.

In his new role, Harkwell will oversee the strategic sales growth of Waterstone Mortgage, leading the company’s sales staff at branch locations across the country. He will also focus on long-term sales goals, continuing to build Waterstone Mortgage’s nationwide presence as an innovative, technology-driven, retail-focused mortgage lender.

“Waterstone Mortgage’s focus on developing proprietary mortgage technology, as well as their dedication to implementing the best solutions for their customers, were key indicators that this was the right opportunity for me,” Harkwell said in this article in National Mortgage Professional. “I am excited to contribute to their strategic goals, and work alongside the sales and senior leadership teams to continue providing a streamlined and efficient mortgage experience as a purchase-oriented mortgage lender.”

Harkwell previously held senior roles with organizations such as Norwest/Wells Fargo and Citicorp and helped create a private-label mortgage lending platform, Nexstar Financial. 

To be clear, Waterstone Mortgage is a wholly-owned subsidiary of WaterStone Bank, which, in turn, is a wholly-owned subsidiary of Waterstone Financial. 

So that’s how it all connects. 

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Prices are rising everywhere, but owning remains cheaper than renting

Over the 12 months ended July 2021, the Consumer Price Index for All Urban Consumers increased 5.4 percent

Food prices increased 3.4 percent over the last 12 months. Within the food category, food at home prices rose 2.6 percent, including a 5.9-percent increase in prices for meat, poultry, fish, and eggs. Food away from home increased 4.6 percent over this period.

Energy prices were up 23.8 percent from July 2020 to July 2021. Prices for energy commodities were 41.2 percent higher in July 2021 compared with a year earlier. Prices for energy services were up 7.2 percent over this 12-month period.

Prices for all items less food and energy increased 4.3 percent over the last 12 months. Within this category, shelter prices rose 2.8 percent. Medical care prices increased 0.8 percent. Prices for used cars and trucks increased 41.7 percent over the year while prices for new vehicles increased 6.4 percent.

Meanwhile, growth in rent prices, which had slowed down in 2020 as rental demand fell, came roaring back in the second quarter of this year, according to Odeta Kushi, writing a blog for first American, who notes that owning a home was cheaper than renting across the United States.

The median rent in the U.S. jumped 4 percent between the first and second quarters of 2021, the highest quarter-over-quarter pace since 2014, according to Zillow data

“House price appreciation will likely remain elevated in the coming months, but eventually it will moderate from the pace we saw in the second quarter of 2021,” Kushi writes.

“Nonetheless, this analysis demonstrates that the wealth-building effect of home equity is a powerful factor in the homeownership decision,” she adds. “When your home pays you, it makes more sense to buy than to rent.”

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