High employment, low interest rates and technology helped two Metro Detroit mortgage giants post record years in 2019.
Competition is heating up as Pontiac's United Shore Financial Services LLC more than doubled its mortgage volume from 2018 to $107.7 billion. It jumped to the second-largest overall mortgage lender from the fourth, placing it behind Detroit's Quicken Loans LLC, which closed $145 billion in loans last year.
"In 2020, our goal is not only to be No. 1; of course, we're trying to be that," United Shore CEO Mat Ishbia said. "We want to have the best team in America; we have 5,000 great people working here every day. ... We're right behind Quicken, right there at the edge. We're proud of where we're at."
Unlike Quicken, United Shore's United Wholesale Mortgage business does not sell mortgages directly to homebuyers. It sells mortgages through brokers, the middlemen whose job it is to find competitive interest rates from lenders for homebuyers. Quicken also does some wholesale business.
United Shore's 159% year-over-year increase set an all-time wholesale mortgage record. It surpassed the $103.3 billion mortgage volume reported in 2005 by Countrywide Financial, which collapsed a decade ago amid the subprime mortgage crisis.
United Shore leaped Wells Fargo & Co. and JPMorgan Chase & Co. in overall closed loans for the year. It also was America's No. 1 wholesale mortgage lender for a fifth consecutive year.
Quicken's 2019 mortgage volume was a 75% year-over-year increase and beat the company's previous record volume of $96 billion in 2016. It has been the largest mortgage lender in the country since the fourth quarter of 2017.
"It's no secret this was a good year industry-wide, but our tech infrastructure and commitment to service allowed us to continue to provide closings two weeks sooner than the industry average, a gap that grew even larger as the year went on," Bob Walters, Quicken president and chief operating officer, said in an email.
High employment levels, a growing economy and falling interest rates contributed to increased homebuying activity in 2019, according to the National Association of Realtors, which reported contract signings were up 7.4% year-over-year in November.
"The recent dip from last summer in rates going lower made many homes affordable," said Rocke Andrews, president of the National Association of Mortgage Brokers. "In a lot of communities, it is cheaper to own. That is, if you can find product. Inventory is low."
Falling interest rates also encouraged refinancing, Ishbia said. Home purchases accounted for 51% at United Shore, down from 70% in 2018.
Historically, Quicken also has been a leader in refinancing. It experimented with some new promotions that led to its largest single-day volume of consumers to originate a mortgage on Cyber Monday in November.
"We have more unique marketing campaigns planned for 2020, and we see this being a strong year for home purchases throughout the spring and summer," Walters said.
Both companies have been hiring. United Shore plans to add 2,500 employees in 2020 and more than double the size of its campus after purchasing a building across from the headquarters it built and opened in June 2018.
"We have some of the best rates in the country because we are building out the technology to make the mortgage broker process faster," Ishbia said. Access to such technology to ease the process of using a broker has increased their share to nearly 20%, according to the National Association of Mortgage Brokers.
"A lot of borrowers are looking at the high prices of real estate and the large levels of debt, particularly student loan debt," Andrews said. "They have to go to two or three places before they can go and find a lender that fits their particular profile. We expect brokers will exceed 20% in the coming years."
