UWM - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 originations of $38.7B were within prior guidance ($34–$41B), with total gain margin of 105 bps; net income improved sequentially to $40.6M despite a $469.5M loss on other interest rate derivatives.
• 2024 was a record purchase year ($96.1B) in the industry’s weakest existing home sales environment since 1995; total 2024 originations rose 29% YoY to $139.4B; gain margin expanded to 110 bps (+19% YoY).
• Management raised Q1 2025 gain-on-sale margin guidance range to 90–115 bps (from 85–110), and guided Q1 production to $28–$35B (seasonally lower), signaling confidence in throughput and pricing discipline ahead of potential refi tailwinds.
• Liquidity remained strong (~$2.5B), with total equity at $2.1B and MSR fair value of ~$4.0B; the Board declared a $0.10 dividend for the 17th consecutive quarter.
• Catalysts: raised margin guidance, AI/technology rollouts (ChatUWM, TRAC Lite), and broker channel share momentum; watch derivative strategy normalization (hedges removed in December) and servicing valuation dynamics into any rate decline.

What Went Well and What Went Wrong

What Went Well

• Record annual purchase production ($96.1B) in the lowest home sales year since 1995; total production up 29% YoY to $139.4B with gain margin up to 110 bps; “we tripled our refinance volume in 2024 compared to 2023”.
• Operational scalability and investment: “we can currently handle more than $100 billion of additional origination volume without increasing our fixed expenses” and 2024 adjusted EBITDA of $460M; Q4 adjusted EBITDA $118.2M.
• Channel leadership and tech: broker channel share momentum (27.4% Q3 indicator), ongoing AI investments (knowledge, efficiency, growth), and product launches (ChatUWM enhancements; TRAC Lite; Conventional Cash-Out 90).

What Went Wrong

• Sequential margin and purchase volume compression: total gain margin fell to 105 bps from 118 bps in Q3; purchase originations dropped to $21.9B from $26.2B.
• Elevated operating expenses: salaries ($193.2M vs. $181.5M), G&A ($60.3M vs. $53.7M), marketing ($30.8M vs. $22.5M) rose QoQ; management framed increases as intentional investments, not one-offs.
• Volatility in financial results: large Q4 loss on other interest rate derivatives ($469.5M) even as MSR fair value change was positive $309.1M; underscores exposure to market moves despite strong core production.

Transcript

Operator (participant)

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Fourth Quarter and Full Year 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If at any time you would like to remove yourself from the queue, press star one a second time. Thank you. Blake Kolo, you may begin the conference.

Blake Kolo (Chief Business Officer and Head of Investor Relations)

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Fourth Quarter and Full Year 2024 UWM Holdings Corporation's Earnings Call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliations between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC. I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Mat Ishbia (Chairman, CEO, and President)

Thanks, Blake. And thank you, everyone, for joining us today. You know, 2024 was another fantastic year. You know, I think you saw the headlines of, you know, you know, one of the toughest mortgage years in a while. Obviously, the last three years have been tough. We grew 29% year-over-year, about $139 billion. Our gain on sale was up 20%, 110 basis points. And the broker channel, which is the biggest indicator, all things we've been talking about, grew quite a bit as well. I think the third quarter metric was maybe 27.4%, which is far higher than we've seen in, you know, 15 years. All of the themes we've been talking about have continued to happen. We've continued to dominate the purchase market, leveraged our competitive advantages in talent, technology, and world-class service.

And like I said, helped the broker channel grow its, you know, highest share of industry in years. And so exciting to see we retained our title as the largest mortgage company in the U.S. Now, I think in 2024 was the third consecutive year we were the number one mortgage company in America, the fourth consecutive year the largest purchase lender in America. And now I think it's the tenth consecutive year as the number one wholesale lender. So we're very proud of what we're doing here at UWM. 2024 was an amazing year, and we're super excited about 2025. As I've spoken in the past few quarters, we continue to invest in cutting-edge technology, including AI, investing in our people, and we're in the best position to capitalize on any change in the current market dynamics. There are about $2.5 trillion and growing in mortgage rates over 6%.

And so it won't take much for a shift in rates for those loans to be in the money. No matter what happens in the market, we are focused on what we can control and making sure we are more prepared than our competition. You've all heard me say this before. I'll say it again. The unique thing about UWM is that our business is strong enough that we can simultaneously win big now while also preparing for the future, whether it be interest rates dropping, consumer trends changing, new technology, or even regulatory changes. And 2024 was the lowest home sales year since 1995, and UWM had our best purchase year of all time, over $96 billion of production. We actually think that might be the highest of all time for any direct lender in history. But either way, we had an amazing 2024.

Like I said, $139.4 billion in overall production, a 29% increase. We also tripled our refinance business in 2024 compared to 2023, despite the interest rate environment, which we'll talk about a little bit later. We delivered about $330 million of net income, $329.4 million to be exact, and our gain margin is 110 basis points, which is up from 92 basis points last year. Turning to the fourth quarter, you know, we had an amazing quarter across the board, $38.7 billion in production, well within our guidance. You know, it's also worth pointing out in that quarter, we did over $17 billion in the month of October. You know, this is like a five-week minor rate drop that was in, you know, August and September. And with that little thing, we almost doubled our business.

And if you kind of do a quick run rate, you're thinking $51 billion, $52 billion, $53 billion with a small rate drop. What can happen if actually a bigger rate drop happens? We're going to all find out, but we are prepared here to double our business plus, which is exciting. Gain margin was 105 basis points, well within the guidance for the quarter. And obviously, we did $40.6 million of net income. So once again, great year, great quarter. Firing on all cylinders at UWM. We're ready for whatever the market gives us and whatever the market does. We're ready to dominate here. So I'm going to turn it over to our CFO, Andrew Hubacker. He'll give you some more information.

Andrew Hubacker (CFO)

Thank you, Mat. Mat already covered many aspects of our Q4 and full-year financial performance, so I will just focus on a few, just a few additional highlights. We remained profitable operationally in 2024 with $460 million in Adjusted EBITDA. For Q4, our Adjusted EBITDA was $118.2 million. These operational results were largely consistent with the prior year, even as we invested significantly in people, processes, and technology to prepare the company for continued growth. We invested in growing our operations, underwriting, and technology teams to support increased production volume, and we believe that we have greater operational capacity than we did in 2021 when our origination volume exceeded $226 billion. Said differently, we believe that we can currently handle more than $100 billion of additional origination volume without increasing our fixed expenses.

Despite our significant short and long-term investments, we earned $329 million on a GAAP basis and $460 million on an operational basis in 2024. We also maintained our liquidity and capital and leverage ratios within targeted ranges in the current environment. As of the end of the year, we had approximately $2.1 billion of total equity, just over $500 million of cash, approximately $2.5 billion of total accessible liquidity, and an MSR portfolio with a fair value of approximately $4 billion. We talked about this throughout the year, but in so many ways, 2024 was a year of investing in our operational capabilities to prepare the company and the wholesale channel for what we see as significant market opportunities. We've also focused on being prepared for these opportunities from a capital and liquidity perspective, and we believe that we remain well-positioned operationally and financially for any market cycle.

I will now turn things back over to our Chairman, President, and CEO, Mat Ishbia, for closing remarks.

Mat Ishbia (Chairman, CEO, and President)

Thanks, Andrew. You know, I'll close with a few points before the Q&A. 2024 was a banner year. From a production perspective, as you can see, we delivered great income as well. Really caps our third year where we dominated in a down mortgage market. What you can't see in the numbers in 2024 is a huge year of technology and artificial intelligence front. We invested in AI in three major categories: knowledge, efficiency, and growth. And we are winning on all fronts. And you'll see some of those things start to result in 2025 and 2026 on our financials and our production. The broker channel continues to show incredible momentum. In third quarter 2024, obviously the fourth quarter numbers aren't out yet, but the broker channel's share of all direct funded was 27.4%, up 7 percentage points from 2022 third quarter.

So in two years, it grew 7% and almost doubled from where it was the third quarter of 2020. So in four years, it's almost doubled. It's amazing to see. Can we do it again? Right? The way I look at it is, can we double it in the next four years again? I don't know, but I know we're working hard towards it, and the broker channel is gaining momentum, just like we said it would since we went public years ago. Additionally, by our calculations, over 16,000 loan officers joined the broker channel, with over half of them actually leaving from the retail channel to join the brokers. This momentum is continuing, like we talked about in 2023 and 2024. We're excited to see how it continues to grow going forward.

With all these great things, the technology, broker channel, it always comes back to our people at UWM. The care factor and the culture we've created at UWM is what differentiates us. Also, 25,000 clients we welcome on our campus for training each year helps spread the culture of the broker channel. Our team loves coming to work every day, and our training program, both internally and for our clients, remains world-class so our people can continue to grow and flourish here at UWM. In 2025, our priorities remain the same: build the best technology and provide the best service to the broker channel, take incredible care of our team members and clients by treating them like family, win every single day by dominating on purchase and staying prepared for a shift in rates, and continue to reward our shareholders.

I'm very proud of what we did in 2024, and I'm excited about 2025. Now, looking to the guidance in Q1, we expect to do $28-35 billion. As you guys always know, the first quarter is always the lowest production quarter, and so we expect that to carry on this year as well. Last year, we did $27.6 billion, so that's, you know, actually below what our low end of the guidance is this year. We also expect gain on margin to be between 90 and 115 basis points for the first quarter. So we're expecting a great first quarter, but even more importantly, an amazing 2025 here at UWM. So now I'm going to turn it over to questions. Thanks for your time today.

Operator (participant)

At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. If at any time you would like to remove yourself from the queue, press star one a second time. We'll pause momentarily to assemble our roster. We will now begin the Q&A session. Our first question comes from the line of Terry Ma with Barclays. Please go ahead.

Terry Ma (Senior Equity Research Analyst)

Hey, thank you. Good morning. Maybe just first starting with operating expenses. It was quite a bit higher than what we were expecting, you know, this quarter. I'm just curious if there was anything one-time in there and kind of like what we should expect for a runway going forward.

Mat Ishbia (Chairman, CEO, and President)

Yeah, no, it's a one-time investment, but we're going to do it every month. So what we're doing is we're investing in our business to dominate. So the expenses are not even a thought on my mind. We're prepared, as Andrew said, $100 billion more, but maybe to more than do that. Like we can literally double our business. And so preparation is key. As you guys saw with the little refi boom in October, you know, we almost doubled our business. Nobody else can do that. And so we're prepared for that, not only from the refi perspective, but also the purchase as the momentum is really, really strong right now. And we're prepared to dominate. And so our business model is not, you know, nickel dime every expense. Our business model is win. And so these are investments, not expenses.

In the big scheme of things, these little investments that we're talking about are going to pay such huge dividends, just like we've always done. You know, the expenses, we probably don't need to hire many more people. We're kind of be more flatline is how we think about it from a perspective of, you know, replacing attrition. It's not like our expenses will go up more, but these were investments. 2024 was an investing year and a technology building year, and 2025 is a dominant year. That's what we're going for.

Terry Ma (Senior Equity Research Analyst)

Got it. Okay, and maybe just on kind of refi, you mentioned you kind of tripled it in 2024. Maybe just talk about all the initiatives you're doing around that, kind of what, you know, the outlook is for share and refi kind of going forward. Thank you.

Mat Ishbia (Chairman, CEO, and President)

Yeah. Well, share and refi will be interesting to see. But in general, the outlook is, you know, we are prepared, back to my earlier statement on the same topic, to double our business. And like you saw, we tripled the refi share, but while still doing more purchase business, which is phenomenal. I think it was the largest purchase year in history by any lender. And obviously, it was a slow year from a purchase sales and all those stuff in the market. So, you know, we think 2025 will be a better year. There's more houses for sale. And then on the refi side, you're talking about like, like there's trillions of dollars that just need about, you know, a quarter lower in rate than we are right now. Like we're not far off. The 10-year is at 4.30%, I think, ish.

You know, I always tell you 3.75% is where the money's at. You know, but if it gets down closer to 4%, you're going to start seeing some of this, and we are prepared. And so we're excited about the opportunity on refi. We're going to continue to dominate on purchase, and we're excited for what's going to happen in 2025. I really think it's going to be a heck of a year.

Operator (participant)

Our next question comes from the line of Eric Hagen with BTIG. Please go ahead.

Eric Hagen (Managing Director and BTIG Mortgage and Specialty Finance Analyst)

Hey, thanks. Good morning. Good to hear from you guys. Okay. So you guys have been really active with various incentives, offering other ways for successful brokers to pass along savings to borrowers. How do you maybe measure the success for these initiatives? Like how do you like benchmark that success, you know, at different levels for interest rates maybe or mortgage rates?

Mat Ishbia (Chairman, CEO, and President)

Yeah. Oh, thanks, Eric. Appreciate the question. Yeah, there's a lot of, a lot of ways I can go through, and it's probably more complicated and more detailed than I'm going to do on this call. But the key thing here is this: a lot of the, you know, if you've noticed, I bumped our margin for the first time from 85-110 to 90-115. So first time, you know, for years, we were at 75-100 in the troughs. I believe the opportunity is coming. Now, I don't, doesn't mean we're going to be on the high end of these things. I think we're going to be consistently delivering what I always deliver, which I tell you, we're going to do it, we do it.

But what I'll tell you is you see these incentives and these marketing things, and these are all great, but also you got to understand the all-in margin that we deliver is a focus of ours. And so the way I look at this, there's measurements on retention of those brokers and the LOs and what percentage of their business they use UWM for. How do we get them in the door? How do we get them bought into more of our products and services? From training, we had Success Track, like, you know, this week alone in the middle of February in Michigan, we have over 900 clients that flew to Pontiac, Michigan. I know, Eric, you've been here before. It's beautiful, but it's freezing out here. But people still flew out here because they're getting trained.

And so like those are some of the ways you measure those investments. It's like I'm investing in giving them a price incentive that might do this, that drives them to understand what we do, which helps them grow their business, which then helps them get more business, which then drives the UWM. Once again, that's a very layman's way of saying it. And I have a, you know, a team of analytical people that have detail beyond detail about how it actually works and how we make it happen. And so, you know, a small little thing is if you looked at, I kind of mentioned it in the pre-talk, where like in October, like we doubled like overnight. It's like a $52-54 billion run rate with really not even a refi.

So it's like, how do I train our brokers and coach them ready to do refi streamlines or IRRRLs? Or how do I teach them how to do cash outs? And how do we do these things to get them prepared? It's all about preparation so that they can dominate and then we can dominate.

Eric Hagen (Managing Director and BTIG Mortgage and Specialty Finance Analyst)

Great stuff. Appreciate that. You know, always appreciate your thoughtful answers. I mean, looking here at the volume and margin guidance you gave for the first quarter, I mean, how much of that drop quarter over quarter would you just attribute to the, you know, just seasonality versus there being an actual falloff in demand at these rates? And is there like a baseline minimum volume of originations you might expect right now, even if rates were to go higher than they are today?

Mat Ishbia (Chairman, CEO, and President)

Yeah. No, great question, Eric. Appreciate your thoughts on it. And so, yeah, we guided to $28-35 billion last year. I think we did $27.6 billion in the first quarter. I don't remember what I guided to last year, but I would say it's materially less than what we're at right now. These numbers, like I expect us to do more, you know, each quarter. Like we're trying to build upon building. And so the way we look at it is right now, these numbers are actually really good. If you see what everyone else will guide you and what everyone else thinks you're going to do, being able to guide to $28-35 billion, once again, I'm not going to exceed those numbers. Like I'm trying to give you real numbers where I think I'll be in this range on margin and at the same time volume.

But we feel really good about that. And to do $30 billion, let's just call that the number, $29-30 billion in the first quarter, I don't know the last time that's been done besides in 2020 and 2021. And so if you think of the last 10 years of any mortgage company, why don't you find anyone that's done $30 billion in the first quarter besides 2020 and 2021? I don't think it's happened. Maybe 2022 because of some holdover from the rates. But what I'm saying is it's a great, going to be an amazing quarter. And knowing that the second and third quarters always pick up, we kind of look at this as the low quarter. First quarter is always the worst. Fourth quarter is the second worst. Second and third are always awesome.

Eric Hagen (Managing Director and BTIG Mortgage and Specialty Finance Analyst)

Yep. Great stuff. Thank you guys so much.

Mat Ishbia (Chairman, CEO, and President)

Appreciate you.

Operator (participant)

Our next question comes from the line of Derek Sommers with Jefferies. Please go ahead.

Derek Sommers (Equity Research Senior Associate)

Hey, good morning, everyone. To follow up on the guidance question related to volume, in the first half of the year, we saw a purchase mix at around 80%. In the second half, you know, call it around 60%. Kind of what are your expectations for that mix heading into 2025?

Mat Ishbia (Chairman, CEO, and President)

And you're saying in the purchase mix of the market?

Derek Sommers (Equity Research Senior Associate)

Both of the market and UWM.

Mat Ishbia (Chairman, CEO, and President)

Okay. Yeah. I mean, a lot of it's dependent on interest rates, right? You know, so like the way I look at it and our focus is like, how do we do $100 billion of purchase, right? And then refis, you know, you go, we did $96 billion of purchase this year and there wasn't much refi. Can we do $100 billion, $150 billion of refi? Possibly. If rates go up to 7.5%, well, we'll do $20 billion of refi, $30 billion of refi, right? And so understand what the market in the 10 year, that's why it's like literally where no one else will be able to tell you this, Derek, that like I can do $130-140 billion this year or I could do $260 billion this year, right?

I could do it at 90 basis points of margin or I could do it at 130 basis points of margin. Like that's how wide of a range it is. But everyone else will say, oh, well, if the market turns and this happens, and like we're actually prepared to do that right now. Like if the rates drop tomorrow, something happens, like we'll do, we could do, you know, $60 billion in the second quarter, right, at good margins. So that's how comfortable we are. That's back to the first question about expenses. It's not expenses, it's investments in the business, investments in the future. And while making these massive investments from technology and operations and people, while making those massive investments, we're still profitable, right? And very profitable, you don't count the MSR fluctuation, which I have, you know, no control of, obviously.

And so we feel really good about that. And I think we're really ready to be. So 60%, it's hard to predict the number. It's all dictated on rates. But for us, you know, 60%-65% purchase, 65%-70% purchase in a higher rate. And then it could flip to 50/50. It could go 60/40 refi if the rates drop far enough.

Derek Sommers (Equity Research Senior Associate)

Got it. Thank you. Helpful commentary there, and just what's your current approach to managing servicing UPB levels kind of relative to origination trends?

Mat Ishbia (Chairman, CEO, and President)

Yeah, so we monitor very closely. We understand the servicing asset very, very well, and you know, we're still probably the only one out there originating at such a high level that our asset goes up as a volume perspective with new originations, but we look at it all the time. We decide whether do we want to opportunistically sell. We could go through the process and say, hey, we're going to retain it all and just double the servicing book over this year, right? Like we could do that as well. There's a lot of things that we look at. We like the asset in general, but at the same time, if people are going to pay us, you know, a seven multiple, you know, well, I'll sell it for a seven multiple, right?

And so we look at some of these numbers and sometimes people are looking at paying those numbers. And if they're not, then we retain it because we feel really good about the asset. And so it's a balancing act, understanding cash and cash consumption while at the same time building our servicing portfolio and helping our brokers continue to grow. So we feel good about where we're at right now. And you know, you can ask me like what the vision is, what the strategy is. I could tell you all that stuff and I could say, but tomorrow something could change and I'll modify it, right? And that's how we look at it. We look at it every day because we're in the weeds of the business.

Derek Sommers (Equity Research Senior Associate)

Got it. Thank you for taking my questions.

Mat Ishbia (Chairman, CEO, and President)

Thank you.

Operator (participant)

Our next question will come from the line of Bose George with KBW. Please go ahead.

Bose George (Managing Director)

Hey, good morning. Actually, just following up on that question on the MSR. I mean, given that you know, you guys issued debt, you obviously have a lot of cash on your balance sheet, a lot of liquidity. You've paid down the warehouse line. You know, does that change how you might, you know, what you might do in terms of MSR sales or are those two kind of independent decisions?

Mat Ishbia (Chairman, CEO, and President)

Everything's tied into it, right, so everything is part of the equation, but nothing drives the equation, right, besides the conversations, the data, understanding the marketplace, and so it's hard to answer the question, you know, like going through like what comes into the thing. We have a risk committee. We meet with everyone organizationally. We make decisions on these things, and so it depends on the situation. I could give you the exact answer right now and then someone calls back and say, okay, we'll bump that option to the MSR deal to this number and we'll say, okay, well, for an extra $30 million in cash, all right, we'll do it, right, and so all those things are coming to it. The nice part for us on the MSRs is we actually continuously make it. It's like we make it, so we originate.

No one else makes it at the levels we make it. So therefore, everyone else is trying to buy it and get something that we make. I can go make more, right, anytime. And so we go make more every single month, every single quarter, and no one else originates at the levels we do. And so we're constantly originating and making the MSR asset. And therefore, we look at all aspects of it and make decisions on whether we sell or not. We can sell excess, but we replenish it every single month, every single day. Like the numbers are, so it's not as much of a concern where other places are like, oh, they sold their MSRs or they're not selling, but our number moves materially based on how much we originate.

Bose George (Managing Director)

Okay. Yeah. Makes sense. Thanks. And then actually going back to, I think Andrew made that comment, $100 billion you could originate without increasing fixed expenses. I was just curious, is there a good way to think about fixed versus variable, you know, in that sort of scenario?

Mat Ishbia (Chairman, CEO, and President)

No, you know, you know, not really. I mean, like we're prepared fixed-wise. Obviously, there are variable expenses all along the way as credit report costs and all these things go up all the time. But we feel really good about, I know you're trying to figure out how to do a model, which I respect and understand, but like we're in a really great position from a fixed expenses. We don't have as much, you know, like the fixed expenses operationally, and then there's obviously variable on every single file, but sometimes there's less variable expense than people realize. And a lot of this numbers hit the bottom line.

And I think, although I can't show you each, you know, example from the month, but like the gain on sale margin that will go up and the volume that will go up is so excessively more than any expenses, fixed or variable, that come on our balance sheet or come on our expense or come on our income statement that it's going to be a huge, huge difference in a positive way. And that's why we're prepared because if you miss that window, which is what everyone else does, is they keep their expenses low and then the market moves, you know, what happens? Like look at 2021 when that stuff happens. And like we're able to make, you know, $1 billion plus in a quarter, right? Like and so, but if you're not prepared for that, like these things pass you by. And so we're prepared.

There are going to be variable expenses that are a little more than normal if you do more volume, but it's not a big number relative to it, and it's going to be a huge amount of money hitting the bottom line, which is what we're prepared for.

Bose George (Managing Director)

Okay. Makes sense. Thanks a lot.

Mat Ishbia (Chairman, CEO, and President)

Thank you.

Operator (participant)

Our next question comes from the line of Brad Capuzzi with Piper Sandler. Please go ahead.

Brad Capuzzi (VP of Equity Research)

Hi. Thanks for taking my question. Just wanted to talk about if you guys had any updates on the dynamics playing out within the broker channel. Obviously, some of your peers have been talking it up and, you know, UWMC has a very strong hold on the channel, but was wondering if pricing has been rational and if you're seeing any increased competition.

Mat Ishbia (Chairman, CEO, and President)

Yeah. So the broker channel is winning. It's growing. And I think, you know, I don't know how long you've been doing it, Brad, but I know you've been to our office once before. You probably understand a little bit about the business. But like the broker channel is growing. It's growing faster than I even thought it would grow, to be honest with you. You know, we've seen that it's almost doubled in four years. It's crazy to even talk about. I said it when we went public. And so you can go back and pull my, you know, roadshow and all the stuff and everyone else's roadshow. Everyone said they're going to focus on wholesale because it's growing. No one thought it would grow as much as I said it would and it has. And at the same time, everyone says they're going to get into it.

And I love it. I love it when these guys try to come play with us because it's only good for the brokers. And at the same time, they can't compete. Anytime a broker uses one of these other lenders, they just kind of say, oh my gosh, I can't use them again. And so it's okay. I like the company. We have not seen any increase in pricing competition, to be honest with you. We are very clear. Our margins, actually, as you just saw, were up 20% year-over-year. And we did more business, over almost 30% more year-over-year. And so yes, everyone's coming for the wholesale channel. Everyone wants to be involved with the brokers, but none of them are willing to do what it takes. And what it takes is technology, partnership, helping brokers win and grow.

And we are in that game all day, every day. They're going to follow our margins, right? I tell you, we control it. I set the margins daily and we set them and everyone else follows us. We are the leader and it's not close. But, you know, great for the competition. I think it's important that they tell you that stuff so you can move their price targets up, all that BS. You should probably move ours up too, by the way, because yours is a little low yourself. But anyways, like all that stuff is silliness, right? People want to come in. They've been saying it for years. Oh, we're coming. We're going to be the number one wholesaler. Why don't you go back and pull it? We're going to be the number one wholesaler and we're going to take UWM down.

We have almost 50% of the market. So we're excited about it. We love the competition. But the best part about the whole thing that I just went through is brokers are winning. Those loan officers, retail loan officers, they're leaving to join broker channels. Brokers are growing because they're cheaper, faster, and easier. And with the new administration, it's only going to help brokers even more. You watch out. It's going to help brokers grow and we're going to keep growing with them.

Brad Capuzzi (VP of Equity Research)

Thanks. And then can you just talk about the interest rate derivative hedges you put on this year? Do you expect these hedges to continue in 2025? And are you guys have any internal target on a hedge ratio?

Mat Ishbia (Chairman, CEO, and President)

Yeah. No, those weren't really even hedges. The way I look at it is there's a lot of stuff that we looked at with market volatility to understand while the election process was going on. And we pulled some of those. We wanted to make sure we had some security and some safety on both ways, up and down during the volatility of the markets. And that's smart business and we'll continue to do that type of stuff. But we pulled that stuff off in December. And so we do not have that stuff tied to it. I don't look at them as hedges like maybe you said, but that's not how we looked at it. But we looked at it as protecting the business, understanding the markets, understanding volatility, who knew what would happen with presidential elections along with other regulatory things.

And so, but we do not have those in place as of December. After the election, we made a decision to not go forward with that. And at the same time, we can put them back on tomorrow and make different decisions as we meet all the time, but that's not part of the equation for 2025 at this point.

Brad Capuzzi (VP of Equity Research)

Thanks for taking my questions.

Mat Ishbia (Chairman, CEO, and President)

Thank you.

Operator (participant)

Our next question will come from the line of Doug Harter with UBS. Please go ahead.

Doug Harter (Equity Research Analyst)

Thanks. Hoping you could talk a little bit about your outlook for kind of the leverage, you know, net funding debt went up, you know, and kind of how you think about what is the, you know, the level of equity you need to run this efficient business.

Mat Ishbia (Chairman, CEO, and President)

Thanks, Doug. Appreciate the question. You know, we look at all these things every day. CFO, finance team, everyone's on top of all these details. You know, net worth is obviously important. We make income. We obviously pay a great dividend out to all our shareholders, which we'll continue to do. But, you know, you're talking about stuff that I don't think really impacts the business at the level that we should be talking about in this earnings call. I can go through all the, of course, we're going to meet all the metrics and all the different things, but building up capital is important. Having liquidity is the most important. And we have those things at UWM and we'll continue to have those things as we earn income. We have access to getting more liquidity with lines of credit, as you know, selling MSRs.

At the same time, we're selling a lot of MSRs and you make money on some of these because people are bidding higher and higher numbers because the truth is we're the only ones originating them. So, you know, in general, all of our ratios are really strong and we feel really good about where we stand. And we monitor it every single month, quarter, however you want to think about it. And we're in really, really strong position, not only for this year, but for future years as well.

Bose George (Managing Director)

All right. Thank you, Mat.

Operator (participant)

Our next question will come from the line of Jeff Adelson with Morgan Stanley. Please go ahead.

Jeff Adelson (Research Analyst of Consumer Finance)

Hey, good morning, guys. Thanks for taking my questions. Mat, last quarter, you commented on some of the new changes coming through with the new administration in place today. You know, obviously, we're seeing a lot of news flow coming out each day with different changes at the various agencies like the CFPB. You know, there's been talk of GSE reform, et cetera. You just maybe give us an update on your latest views here, what maybe you see coming out on the regulatory political front and how that flows to United and the broader mortgage industry. Thanks.

Mat Ishbia (Chairman, CEO, and President)

Yeah. No, I think it's all very positive, to be honest with you, so President Trump's come in and done a lot of things he said he was going to do. I think he's put some really good people in place. I think they're not confirmed yet, but the new FHFA director, who I think comes from the industry, which is a huge success for our industry, new CFPB director, which, you know, with a different focus than what they'd had before. I think these things are massive, massive wins for our industry, and I'm extremely bullish on those things for the next three or four years, obviously with President Trump in place. President Trump's leading and doing things and doing all the things he said he's going to do with making cuts and different things. I think it's all upside, all positive.

The only thing that you question is how does it impact interest rates, which a lot of people want to talk about, and so if it impacts interest rates positively, then this is a bull run like you haven't seen probably since 2020 and 2021. If it doesn't impact interest rates positively and interest rates tend to stay where they are, well it's still a positive uptick. My expenses will be lower in certain spots. The opportunities will be lower because of some of these better leaders in place. And I'll just say, I don't mean disrespectfully to the past people, but quite honestly, there was not a great connection to the industry, and so, you know, it's only better. The new FHFA director will be better. The new HUD director will be better. The new CFPB director, like will be better.

All these things will be better than what we had before. So anyone monitoring our industry will say, oh, the industry is going to have upside and better opportunities than it had the last four years. Now, the last four years, we did a heck of a job. I feel pretty good about it. So if it's going to be better, I'm happy with it. And I think President Trump's doing good things. And it's great to have a leader lead and hopefully do good things for, you know, not only our industry, but America in general.

Jeff Adelson (Research Analyst of Consumer Finance)

And just in the float strategy from here, I know you've already taken some recent action to increase that, but can you just maybe give us an update on the thinking for the rest of the year here? And would you guys be looking to maybe achieve some of that via acquisitions or other methods?

Mat Ishbia (Chairman, CEO, and President)

Yeah. No, I appreciate it. We look at everything. You know, we look at everything all the time. How do we make things better? You know, getting more float out there is important. But at the same time, the stock price is so low, it's hard for me to sell or do anything at this stock price. It's just silliness. Even your price target is silly too. I saw yours as well. But once again, we're going to do better. We're going to keep winning. And people that buy into it and understand what UWM does will understand that and will continue to grow with us. And so yes, we will have more float and I have plans and strategies around it. That's first. Second, do we look at acquisitions? Yes. I look at everything and there's opportunities out there. People want to be part of our team.

And then third, and finally, it's like UWM wins regardless of these things, right? Like people want to talk about the stock price and I kind of teased you guys a little bit about some of this stuff, but it doesn't really matter at the end of the day because we are winning every single month, every single quarter. And anyone that invests in UWM gets a massive return from the dividend and at the same time, the growth that we're having. And so there's nobody that doesn't think that the industry is going to have a better four years than we had the last two or three, right? There's no one. I don't think there's a human being out there. So if you just understand that, that, hey, the last three years have been the trough, there's no way the next four are going to be worse. That's factual.

So we're going to grow, we're going to win, the stock price will grow, the float will grow, opportunities will grow, UWM will make more money, brokers will grow. Like it's all upside, better politicians, better politics stuff, better regulatory, like all of it's better, better, better, better, and so the way I look at it is it's all upside right now. Does that upside happen tomorrow or does it happen in three months, six months, twelve months, eighteen months? But it's all better than the last three years, and there's no smart person on this call or in the room that will say that they don't think it'll be better in the next three to four years.

Operator (participant)

Once again, for any questions, press star one. And our next question will come from the line of Mikhail Goberman with Citizens. Please go ahead.

Mikhail Goberman (VP of Equity Research)

Hey, good morning. Thanks for taking my question. Just to follow up on an earlier theme, hypothetical scenario, supposing this bond rally continues down into the 4% range and maybe even down to that sweet spot you mentioned earlier of 3.75%. How do you guys see the interplay between the origination side of your business and the servicing side of your business, specifically how that would affect servicing earnings and valuations there? Thanks.

Mat Ishbia (Chairman, CEO, and President)

No, hey, great question. I love what you're thinking because, you know, we talk about that stuff a lot. You know, in a hypothetical and positive and optimistic situation where the 10-year drops to 4.00% or 3.75% and all of a sudden the rates drop with $2.5-3 trillion of borrowers that are going to want to refinance and take advantage of while also making homes more affordable for purchases, which is why I think it's a great thing for everybody. Yeah, it's going to be massive. The first thing you'll run across, the only thing you're going to run into on the interplay between MSR valuations and originations is just a timing issue. If that hypothetical rate drop happened March 29th, you're going to have a huge write-down of MSRs and you won't have a huge write-up of originations until the next quarter.

Now, if it happens on April 1st as an example, then there's going to be a big interplay. It's going to be like, hey, we made, you know, $800 million this quarter of originations and we had a write-down of $500 million of MSRs. And it's like, okay, you know, and you understand what it is and you keep replenishing that MSR book. So that's how we look at it. But I look at it as a huge opportunity because volumes and margins will go up. Now, other players, back to my comment earlier, we talked about other players have that same dynamic. You've got a servicing book, but they're not prepared to do that, you know, $60 billion in the quarter at a higher margin to be able to take advantage of it. So you kind of are going to get flat, you know, be flat across the board.

We're prepared to double originations, make the profits huge, obviously have an MSR write-down, which once again, I don't pay attention to because it doesn't really impact. I can't run that. I can't control that. I can control our business and be prepared for everything else. And so we feel really good about that. But that's also why selling MSRs makes sense because you never know what's going to happen. People don't like selling MSRs because they can't originate them. But we can originate them and we make them every single day. So we feel good about that.

Mikhail Goberman (VP of Equity Research)

Great. Thanks, Mat. Best of luck going forward.

Mat Ishbia (Chairman, CEO, and President)

Hey, thanks a lot. Appreciate it.

Operator (participant)

That will wrap up the Q&A portion. I would like to turn the call back over to Mat Ishbia for closing comments.

Mat Ishbia (Chairman, CEO, and President)

Thank you for joining. Hopefully, you got some valuable information. We look forward to talking to you in the next quarter. A lot of good things happening. We're very excited about what's happening at UWM and we appreciate the support and partnership of all of you guys. Have a fantastic day.

Operator (participant)

This concludes today's conference call. You may now disconnect.