DataDigest: The winners of the purchase market

For all the confusion and volatility that the pandemic caused the mortgage industry, it was clear that the near-zero interest rates were always going to be temporary. After many warnings, The Fed finally made its move in March 2022. Its aggressive inflation-crushing policy extinguished the greatest refi market in history – these days, nearly 90% of residential mortgage originations are purchase loans.

In April 2022, HousingWire published a feature about which lenders were well positioned to capitalize on the transition to purchase, and which companies would struggle. In this week’s edition of DataDigest, I’m going to examine which lenders have performed the best in purchase since the first quarter of 2022. 

For this exercise, I’ll be relying on Inside Mortgage Finance data and looking at origination volume, purchase market share percentage and the lender’s overall mix.

According to IMF’s data, United Wholesale Mortgage was the top purchase lender in the first three months of 2022. UWM originated $19.1 billion in purchase mortgages, good for 5.4% of the purchase market. The wholesaler’s mix was 49% purchase, 51% refis, about average. 

Next up? Pennymac, which originated $17.3 billion in purchase mortgages in the first quarter of 2022. The lender commanded 4.8% of the purchase market, and purchases represented 52.2% of its mix. 

And here’s the rest of the top 25 in Q1 2022 and Q1 2023:

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The data shows that a clear winner is UWM, which has pulled out all the tricks of the trade to juice its purchase business over the last year. UWM ended the first quarter of 2023 with a 7.7% share of the purchase market and nearly identical origination volume at $19.2 billion. While Pennymac topped UWM in both market share percentage (8.2%) and purchase volume ($20.6 billion), virtually all of its purchase business is buying loans through the correspondent channel. It’s a low-margin business and quite a different animal than retail and wholesale, though Pennymac should be given kudos for snagging market share from big banks. 

And what would a mortgage ranking be without Rocket Mortgage? 

In the first quarter of 2022, Rocket Mortgage originated $12.5 billion in purchase mortgages and captured 3.5% of the purchase market. Only 23% of its origination volume was purchase, in line with servicer/refi specialists Freedom Mortgage and Mr. Cooper. In the first quarter of 2023, Rocket originated $9.4 billion in purchase mortgages and its share of the purchase market increased to 3.8%. About 56% of the lender’s origination volume was purchase; only Mr. Cooper’s share at 52% was lower. So while Rocket did improve both its share of the purchase market and its mix, it was outpaced by arch-rival UWM and is still more reliant on refi business than its competitors. 

Let’s break the chart down further. In April 2022, we wrote that lenders with call center-heavy business models would likely struggle to adapt to the changing purchase market, which is heavily reliant on real estate agent referrals. By contrast, lenders with distributed retail and broker-reliant models would perform well. 

That has largely been true, but not entirely. I would have expected Guaranteed Rate, Fairway Independent Mortgage, Guild Mortgage, CrossCountry Mortgage and Movement Mortgage to increase their purchase market share percentages in the year since the rate hikes went into effect. Instead, Guaranteed Rate slipped from 3.1% purchase market share in Q1 2022 to 2.6% in Q1 2023. Fairway dropped from 2.4% to 2.2.%; Guild 1.1% to 1.0%; and CrossCountry 1.7% to 1.6%. Movement increased its purchase market share to 1.6% in Q1 2023 from 1.4% a year prior. 

Other notable changes: 

• Homepoint generated $5.6 billion in purchases in the first quarter of 2022, but was all but defunct by spring of 2023. Much of the wholesaler’s business went to UWM. Can UWM keep that business going forward? 

• Wells Fargo and JPMorgan Chase, which respectively had 4.7% and 3.5% of the purchase market in Q1 2022, both pulled back heavily on residential mortgages. They each ended the first quarter of 2023 with a 2.2% share of the purchase market. JPMorgan will likely climb the rankings in the coming quarters after having absorbed First Republic, which ended the first quarter of 2023 as the 23rd largest purchase lender in America. And don’t look now but U.S. Bank and AmeriHome – heavyweight correspondent players – grew market share, too.

• NewRez/Caliber commanded 4.0% of the purchase market after the first quarter in 2022, but a year later it declined to 2.3%. The firm has leaned into its robust servicing business, which has insulated it from the origination market’s chill. Its parent company Rithm Capital has also been greatly diversifying its business and is considering spinning off its mortgage business.
   
• The homebuilder lending companies took full advantage of the frozen existing home sales market. DHI Mortgage, the lending arm of D.R. Horton, originated $4.5 billion in purchase mortgages in the first quarter of 2022, good for 1.2% market share. A year later, DHI Mortgage originated $5 billion in purchase mortgages in Q1 2023 and owned 2.0% market share. Lennar Mortgage had a similar story – its market share increased to 1.3% from 0.8% a year prior. 

• Other big purchase market winners include Planet Home Lending, which has grown to become a top government correspondent lender. Planet ranked as the eighth-largest purchase lender in America in the first quarter of 2023 with $5.7 billion in purchase origination volume, capturing 2.3% of the market. It wasn’t even in the top 20 a year prior. The company picked up Homepoint’s correspondent business and has been also looking to acquire MSRs; in June it picked up a $10 billion portfolio of Ginnie loans.
  
  
• LoanDepot fell from the 10th-largest purchase lender in America in the first quarter of 2022 with 2.2% market share to the 17th largest a year later with just 1.4% market share. Still, it has repositioned its business for the purchase market – 72% of its origination volume in Q1 2023 was purchase, up from 37% a year prior. After several quarters of financial losses, there are signs pointing to improvements at the California lender.

In our weekly DataDigest newsletter, HW Media Managing Editor James Kleimann breaks down the biggest stories in housing through a data lens. Sign up here! Have a subject in mind? Email him at james@hwmedia.com.