United Wholesale Mortgage (UWM), a Michigan-based wholesale lender, intends to accept cryptocurrency payments by the end of 2021. The company will launch its cryptocurrency initiative with Bitcoin later in the third or fourth fiscal quarter.
United Wholesale Mortgage Is Adding Cryptocurrency to Its Payment Options
According to a report in the Detroit Free Press, mortgage lender UWM is looking into cryptocurrencies in order to expand its payment options in the future. UWM CEO Mat Ishbia made the announcement during the company’s most recent quarterly earnings call.
“We’re excited that hopefully (this year) we’ll be able to execute on that ahead of anyone else in the country,” Ishiba told Wall Street Analysts.
He also stated that the initiative would begin with Bitcoin, though UWM is also investigating Ethereum and other cryptocurrencies.
“We’ll walk before we run, but we’re definitely a leader in technology and innovation, and we’re always striving to be the best and the leader in everything we do.”
Ishiba also stated that there is currently no certainty about the plan’s execution, saying:
“Of course, there are no guarantees — we’re still working out some details. But, without a doubt.”
Force of Shrinking Margins Mortgage Industry to Investigate Alternatives
UWM’s move to digital assets is motivated in part by shrinking margins, which are affecting the mortgage industry as a whole. As a result of this situation, lending firms have earned lower profits despite higher volumes of mortgage business.
According to the firm’s estimates, it earned $138.7 million on $484.6 million in revenue in Q2, a significant decrease from its first-quarter earnings of $860 million on nearly $1.2 billion in revenue. This is a setback for UWM, whose mortgage volumes increased from $49.1 billion in the first quarter to $59.2 billion this time.
According to Ishiba, the mortgage industry’s tighter margins are a direct result of higher interest rates in the second quarter. However, by historical standards, these rates are much lower.
“Because everyone had so much business, the margins were at an all-time high… Now that rates have risen slightly, all of the (lenders) who only do refinances must sharpen their pricing to compete “According to Ishiba, who spoke to the Detroit Free Press.