Here's How Bad 2023 Was For The Top 20 Mortgage Lenders
The 2023 market was not kind to mortgage lenders.
While 2022 was not stellar either, the year was fueled by low rates during the first quarter, averaging just 3.82% January to March, according to Freddie Mac. Homebuyers lucky enough to lock before April rushed to close, boosting the first half of the year.
However, 2023 never saw a 30-year fixed rate below 6% and reached as high as 7.79% in October.
Falling loan origination was about more than rates. Home inventory shriveled as homeowners with sub-3% rates refused to sell. There were just 562,000 homes for sale in April 2023, down from around 1.1 million during the same month in 2019.
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With severe, multidimensional headwinds, it’s surprising lenders fared as well as they did. While mortgages by loan count dropped as much as -64%, the average decrease among the top 20 U.S. lenders was just -26%.
And there were some surprise wins, too. Two lenders increased overall volume while others tapped alternate loan types to prop up falling numbers. Here’s a look at what happened in 2023 according to Home Mortgage Disclosure Act (HMDA) data from the Consumer Finance Protection Bureau (CFPB), accessed via PolygonResearch.com.
2023 Lender Rank | Lender | Mortgages Originated | Vs 2022 |
1 | UNITED WHOLESALE MORTGAGE, LLC | 294,387 | -15.50% |
2 | ROCKET MORTGAGE, LLC | 288,558 | -37.90% |
3 | BANK OF AMERICA, NATIONAL ASSOCIATION | 91,846 | -24.40% |
4 | FAIRWAY INDEPENDENT MORTGAGE CORPORATION | 86,334 | -32.50% |
5 | CROSSCOUNTRY MORTGAGE, LLC | 83,452 | -15.80% |
6 | U.S. BANK NATIONAL ASSOCIATION | 72,124 | -39.80% |
7 | NAVY FEDERAL CREDIT UNION | 71,421 | -5.40% |
8 | CITIZENS BANK, NATIONAL ASSOCIATION | 67,520 | -33.40% |
9 | PNC BANK, NATIONAL ASSOCIATION | 66,913 | -38.00% |
10 | LOANDEPOT.COM, LLC | 65,388 | -58.10% |
11 | DHI MORTGAGE COMPANY, LTD. | 65,004 | +9.20% |
12 | JPMORGAN CHASE BANK, NATIONAL ASSOCIATION | 64,086 | -44.30% |
13 | MORTGAGE RESEARCH CENTER, LLC | 62,413 | -21.40% |
14 | MOVEMENT MORTGAGE, LLC | 59,466 | -15.80% |
15 | GUARANTEED RATE, INC. | 56,393 | -31.40% |
16 | THE HUNTINGTON NATIONAL BANK | 51,955 | -23.10% |
17 | WELLS FARGO BANK, NATIONAL ASSOCIATION | 51,216 | -64.10% |
18 | GUILD MORTGAGE COMPANY LLC | 48,675 | -18.40% |
19 | LENNAR MORTGAGE, LLC | 47,358 | +26.70% |
20 | PENNYMAC LOAN SERVICES, LLC | 46,881 | -38.50% |
Polygon Research, Top 20 Lenders, retrieved from HMDAVision, April 25, 2024.
Which Lenders Fared Best and Worst in 2023?
Wells Fargo posted the biggest loss in mortgage volume in 2023. Compared to 2022, it was down more than -64%. But this was an intentional move by the bank, axing its correspondent lending division where it originated loans through third parties and focusing only on existing customers and minority communities, according to CNBC.
Removing Wells, the biggest loss was experienced by LoanDepot, with a -58% decline compared to 2022. The non-bank lender relied heavily on refinance business: 45% of its mortgage volume came from refi in 2022, per a press release. Refis at the company declined by nearly -74% in 2023.
To be fair, LoanDepot exited the wholesale business in late 2022, contributing to 2023 losses.
LoanDepot was not alone in its precipitous decline. The next three biggest reductions in volume were from:
JPMorgan Chase Bank: -44.3%
U.S. Bank: -39.8%
PennyMac: -38.5%
Some lenders navigated 2023 better by focusing on home purchases.
United Wholesale Mortgage, or UWM, impressively managed to increase it purchase business by +3% in 2023. Overall, the firm’s originations fell just -15% compared to the previous year.
Its modest decline helped it surpass Rocket Mortgage as the nation’s top lender. Rocket posted a -38% decline in originations.
Purchase business for CrossCountry Mortgage and Movement Mortgage fell less than 10%, cushioning both company’s declines to just -15.8% overall.
Builder-Affiliated Lenders Win Big
The only two companies in the top 20 to post higher overall loan count in 2023 were lenders affiliated with builders: DHI Mortgage (D.R. Horton) with a +9.2% increase and Lennar Mortgage (Lennar Homes) with a 26.7% increase.
While high rates and low inventory hurt most lenders, they were a windfall for builder's lenders.
First, builders can create their own inventory – albeit slowly – instead of relying on existing homeowners to sell homes. Second, they can use $30,000 or more in home sale profits to buy down the mortgage rate, leveraging sky-high rates to their advantage.
Buying a brand new home at a rate 2% lower than available elsewhere proved an irresistible proposition for homebuyers.
No-Cash Refis Decimate Volume, Cash-Out Refis Offer a Lifeline
When rates are low, lenders are inundated with “rate and term” refinance requests. This is when a homeowner wants to lower their interest rate or change their loan length, but take no additional cash out.
Not surprisingly, no-cash refinance all but dried up when rates hit 7% after bouncing between 3% and 5% for more than a decade.
Some lenders saw eye-popping declines for 2023:
Rocket Mortgage: -82%
Fifth Third Bank: -72%
PennyMac: -79%
Understandably, companies get too reliant on easy refinances in good times.
In 2023, people refinanced, but mostly for a different reason: to convert home equity to cash.
Rocket Mortgage, the top cash-out refinance lender for owner-occupied residences in 2023, originated over 130,000 of these loans, grabbing a staggering 22% of the market according to HMDA data. Cash-out made up the vast majority of the company’s roughly 152,000 refinances.
The next closest cash-out competitor was UWM, with just 35,992 cash-out refis.
Rocket’s cash-out dominance was a lifeline: these loans made up 31% of the company’s volume in 2023.
Other companies were able to add decent cash-out numbers to falling loan counts:
Nationstar: 22,006 of 28,244 total loans
PennyMac: 17,219 of 46,881 total loans
LoanDepot: 17,074 of 65,388 total loans
As of Q4 2023, The average American homeowner was sitting on $298,000 in home equity (home value minus mortgages) according to CoreLogic. Those who need a large amount of money are evidently willing to pay today’s mortgage rates to access it. It could indeed be worth it to pay off credit card debt with rates as high as 30%.
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Above its peers, Rocket seems to have cracked the code on how to show homeowners the value of tapping into their home equity.
What’s the Score in ‘24?
So far, 2024 is shaping up to be more like 2023 than previous years, despite hopes of falling rates.
Freddie Mac reported a 7.17% average 30-year fixed rate as of April 25, 2024, the highest since November. Many borrowers with smaller down payments or marginal credit are paying well over 7.5%.
Things could get more complicated for companies this year if rates stay elevated and housing inventory remains near all-time lows. The pool of cash-out refinance candidates – which may have kept some companies afloat in 2023 – could dry up, in theory, as the most viable candidates are ushered through the process.
Of course, there are 129 million residences in the U.S., many of them with mammoth equity. Lenders could continue to squeeze cash-out loan volume for years to come: the top 500 U.S. lenders only churned out about 500,000 cash-out refis in 2023 according to CFPB data.
Unless mortgage rates fall further and faster than anyone expected, 2024 could be an even tougher year for lenders than 2023, and that’s saying something.
Disclaimer: Mortgage Research Center, LLC, mentioned in the top 20 list, owns this site.
