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- Quicken Loans indicates that it’s on track to reach $140 billion originations in home loans
- The firm benefitted from a surge in the refinancing of mortgages following the drop in 30-year mortgage fixed rate
- Quicken Loans in a highly competitive industry and command only 5.7% of market share
Detroit-based Mortgage CompanyQuicken Loans has indicated that it is on track to set a new mortgage record this year. It seems Americans are borrowing a lot with credit card debt, also hitting new records recently.
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Quicken Loans could originate $140 billion in home loans this year
The Dan Gilbert-owned, the home loan provider, indicated that 2019 would be its best year in terms of volumes of loans. The firm suggests that it is on track to originate over $140 billion in home loans this year. Previously the company had set a record of mortgages in 2016 when it originated $96 billion in loans.
Since 2012 Detroit has witnessed a consistent increase in home loans issued yearly. However, Quicken Loans benefitted greatly through refinancing of mortgages because of the low-interest rate. Currently, the 30-year fixed interest rate is 3.68% which is the lowest it has been since September 2016.
Bob Walters, the president, and COO of Quicken Loans stated that the falling rates led to more refinancing than before. Walters added that it would be a record year, and it appears they are finishing the year strongly. He asserted that usually at this time of the year, business tends to slow down, but this year has been exceptional.
Moving headquarters to Detroit has paid off
The company relocated its headquarters to Detroit in 2010, and it is a move that has paid off. The firm is the largest revenue generator in Gilbert’s business empire, and it has helped the revitalization of Detroit. Quicken Loans is one of the biggest employers in Detroit, with over 15,000 employees. Over the last year, the company has hired around 3,500 employees in the previous year to process the growing demand.
Industry publications have been ranking Quicken Loans as of the number one direct-to-consumer home loan lender. It is despite being in a competitive space with giants such as Bank of America and Wells Fargo. However, the mortgage industry is highly fragmented, and consumers can visit several bank branches and credit unions for a mortgage. As a result, the firm commanded only 5.7% of the market share in the third quarter.
Interest rates falling
Since March fixed rate has been declining and in September it reached a low of 3.5%. As a result, home loan lenders across the country have seen an increase in refinancing activity. The surge kicked off in late winter when the fixed rates began dropping. Quicken Loans uses an online-only business model, which has helped it do well when borrowers do massive amounts of refinancing.
According to the Mortgage Bankers Association, originations of mortgage refinancing could reach $796 billion in 2019. It is a 70% increase from last year. Also, the share of refinancing activity increased by 38% of all originations, relative to 28% in 2018.
Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.