Q1 2023 UWM Holdings Corp Earnings Call

Participants

Andrew Hubacker; Executive VP, CAO & CFO; UWM Holdings Corporation

Blake Kolo; Chief Business Officer & Head of IR; UWM Holdings Corporation

Mathew R. Ishbia; Chairman, President & CEO; UWM Holdings Corporation

Blake Netter; Research Associate; Morgan Stanley, Research Division

Bose Thomas George; MD; Keefe, Bruyette, & Woods, Inc., Research Division

Bradley Michael Capuzzi; Research Analyst; Piper Sandler & Co., Research Division

Douglas Michael Harter; Director; Crédit Suisse AG, Research Division

Eric J. Hagen; MD & Mortgage and Specialty Finance Analyst; BTIG, LLC, Research Division

Kyle Joseph; Equity Analyst; Jefferies LLC, Research Division

Michael Edward Smyth; Research Analyst; Keefe, Bruyette, & Woods, Inc., Research Division

Michael Robert Kaye; Associate Analyst; Wells Fargo Securities, LLC, Research Division

Steven Cole Delaney; MD, Director of Mortgage & Real Estate Finance Research & Equity Research Analyst; JMP Securities LLC, Research Division

Presentation

Operator

Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation First Quarter 2023 Earnings Conference Call. (Operator Instructions).
Blake Kolo, you may now begin your conference.

Blake Kolo

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the First Quarter 2023 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.
I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Mathew R. Ishbia

Thanks, Blake. A lot of great things to discuss today. I first want to start the call by thanking the 6,000-plus broker and partner that were able to join us for UWM LIVE! last week, which was an amazing event. Also I thank a lot of analysts and investors who were able to come out and make it. I enjoyed spending time with you and fielding the great questions over the couple of days we had together.
UWM LIVE! is an amazing event that allows you to see and feel the growth momentum of the broker channel in one room. All those loan officers, broker owners and even real estate agents flew out to Pontiac, Michigan on their own dime to get better, share ideas for success and try to win together as a team. This is what makes UWM and the broker channel different because we can work together as a team and are excited about the growth together.
Hopefully, everyone who attended were able to see for themselves how the combination of our culture, the amazing relationships we have with our broker partners uniquely positions us for growth and success. It's one of the main ingredients to our secret sauce here at UWM. It's all about the broker community winning, and we are here to help them grow and succeed, and it's happening together as a team.
Before I get into the quarter, I want to take a few moments to address the current overall mortgage industry and market. Obviously, there's a lot going on in the industry and it's still a tough time for most lenders. This is a time when scale, efficiencies, investment in technology and business strategy around purchase are showing the winners separating from the rest. While others are having to adjust their business for the worst, UWM is hiring, innovating and preparing for further growth in '24, '25 and beyond. I've never been more confident with our model and strategy than I am today.
Now let's get into the quarter. We delivered $22.3 billion of overall production, which is the high end of our guidance; more importantly, the $19.2 billion of purchase volume, which was a first quarter production -- purchase record for us. We've been very proud of these metrics, particularly in this rate environment and with the general declines for most in the industry. Our gain margin was 92 basis points, also at the higher end of the guidance, and up from 51 basis points in the fourth quarter. We have controlled our business and are very happy with both our margin and volume in Q1.
I also quickly want to provide some highlights of the 2022 HMDA data that was released in the first quarter. This is the government data that trumps some of the self-reported industry data. For the full 2022 year, we were the #1 overall mortgage lender in America when looking at purchases and refinances of single-family homes, which is the definition of residential lending. I'm proud of this because of the positive impact it had on the consumers who chose to work with mortgage brokers. Per this HMDA data, on average, consumers save $9,400 by working with a mortgage broker and the number goes up to $10,400 for minorities. These facts make me feel great about the positive impact we have on the consumers in America that choose to work with independent mortgage brokers.
Findamortgagebroker.com is becoming a great website where consumers are learning about the benefits of working with a mortgage broker. The data supports that broker channel is the best place for a consumer to get a loan and, as we all know, the best place for a loan officer to work. And in addition to that, some of the best news is we're the #1 mortgage originator in the country once again in the first quarter, helping consumers, helping our brokers. And we're continuing to win together as a team.
Andrew will take a deeper dive into the financials. But before I pass to him, I want to give a couple of comments on the financial performance for the first quarter. As I previously mentioned, 92 basis points of margin and $22.3 billion of production, which were both very good numbers, resulting in a favorable operating gain for the quarter. With that said, many of you are now aware of the 2 distinct components of our reported financials: the income from loan production and servicing income and along with the MSR value -- the value of the MSR portfolio.
Because rates went down in Q4 to Q1, the write-down of our MSR book was large. This markdown is driven primarily by rates that are outside of our control in noncash gain loss. We reported a net loss of $139 million. But at the same time, there's a fair value markdown of over $337 million. Operationally, with higher margins and great volumes, we actually made money. And if you look at it compared to Q1 of 2022, we actually, core-wise, made more money operating than we did in 2022, which is still a good quarter in the industry.
Making money profitably right now is a big deal. And UWM is doing it and we're going to continue to do it going forward. UWM has never been better positioned for the growth and success going forward. I think back to where we were in the first quarter of 2020, and we are so much stronger today in all aspects of our business. With that said, I'm confident we'll be saying the same thing again in 3 years from now in how we continue to evaluate, continue to evolve. UWM has the capital, liquidity, technology, client relationship and infrastructure in place to thrive regardless of cycles, and we are doing that right now.
I'm going to turn it over to Andrew, our CFO, for more details.

Andrew Hubacker

Thanks, Mat. 2023 is off to a great start as we achieved strong mortgage loan production volume and experienced improved gain margin in the first quarter as compared to the last half of 2022. As Mat mentioned, the higher gain margin contributed to improved profitability before considering the impact of the decline in fair value of MSRs.
Our expenses moderated in Q1 as we continue to focus on prudent cost management. Excluding interest and servicing costs and other nonoperational expenses, total expenses declined nearly $50 million or 19% compared to the first quarter of 2022, which also contributed to our strong core operational performance in Q1 of 2023.
During the first quarter, we continued to execute on our plans to strengthen our balance sheet and improve liquidity. We completed 2 bulk MSR sales as well as 2 excess servicing strip sales in Q1 on loans with a total UPB of approximately $98 billion and completed 2 additional MSR sales subsequent to quarter end. Net cash proceeds approximated $650 million from MSR and excess sales in Q1.
In addition, we entered into a line of credit, providing up to $500 million of borrowing capacity secured by our Ginnie Mae MSRs. This facility, along with the MSR facility secured by our Fannie and Freddie MSRs, provide up to $2 billion of borrowing capacity, of which only $500 million was drawn as of the end of the quarter.
Considering available cash, self-warehouse and remaining available borrowing capacity under our secured and unsecured lines of credit, our total liquidity increased to approximately $2.9 billion as of March 31, 2023, which is an approximate $800 million increase from the end of last year. We continue to believe the measures we have taken to enhance our liquidity and strengthen our balance sheet will allow for our continued investments in growing both the wholesale channel and our market share.
Okay. I'll now turn things back over to our Chairman and CEO, Mat Ishbia, for some closing remarks.

Mathew R. Ishbia

Thanks a lot, Andrew. And before I get into Q&A, I want to hit on a couple of points before we go. First, we aren't stopping. We will continue to embrace every cycle of the mortgage industry, driving forward and winning together with the broker community.
We will continue to launch new products, relevant products. We've rolled out many in the first quarter, whether it's technology, whether it's actual products like One-Time Close New Construction, Control Your Price. From a technology, we're going to continue to innovate and win. There's no hidden agenda here. The broker channel is the best place for American consumer to get a mortgage. It's the fastest, easiest, cheapest way for consumers to get a loan, and we'll do everything we can to support growing the channel.
We also appreciate the investor community. And for the tenth consecutive quarter, we're going to announce our $0.10 quarterly dividend. We want to continue to reward our shareholders, as I've said many times in the past, and I'm excited about the prospects of us continuing to do that going forward. In addition to that, the second quarter, we expect production to be between $23 billion and $30 billion with our margins in the range of 75 to 100 basis points.
UWM is winning. We're making income. We have great liquidity. Our technology and our culture are strong, and I've never been so excited about what we're doing compared to our competitors in the mortgage market. We're going to keep winning together. We're now glad to take your questions. I'm going to turn it back to the moderator.

Question and Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Kyle Joseph with Jefferies.

Kyle Joseph

On the margin front, obviously Game On was very successful, and it was nice to see how quickly margins normalized in the first quarter. Can you give us a sense for where you -- obviously, we have your second quarter guidance. But longer term, is this kind of a steady state in terms of where you see your margins going?

Mathew R. Ishbia

Yes. Thanks for the question. Appreciate it. My quick perspective is, -- I think you went to UWM LIVE! also, so I think you know, I kind of answered this similarly. But let me just give you my thoughts, is that in the tough times in the mortgage market, which a lot of people are seeing right now, we're actually winning. And with that being said, I believe the margins in these trough times is probably more like 75 to 100 basis points, which is where we guided towards. I think that's what you'll see. While the rest of industry is laying people off, the rest of -- other companies, whether they're going out of business or making massive changes to their businesses, that will continue to happen. And that's kind of the margin level that it will be in.
And so Game On, as you know, was a strategy that's been exceedingly successful, and it will continue to be successful with what we've done. And as we talked about, we have complete control of our business always. And we told you what we would do, and that's kind of where the margins are right now. And that's why we're guiding to the same exact area for next quarter.

Kyle Joseph

Got it. And then a follow-up for me probably to Andrew. Obviously, you guys did a nice job of enhancing the balance sheet and liquidity in the quarter. As we're thinking about leverage and kind of in this rate environment, is kind of the around the 0.9% nonfunding debt-to-equity kind of the steady state you're thinking about going forward?

Andrew Hubacker

Yes. Kyle, it's Andrew. Thanks for the question. I think that's where we've maintained, sort of in the 50:100, 0.5:1 ratio for the last several quarters. And I think less than 1:1 is likely where we target that and where I would expect we'll remain for the foreseeable future.

Operator

Your next question comes from the line of Steve Delaney with JMP Securities.

Steven Cole Delaney

Congrats on meeting your production guidance, but that should not be a surprise. Now that the Fed is done with rate hikes and futures is expecting materially lower rates in 2024, how impactful do you think to your current business volumes if the 30-year mortgage rate was to drop to, say, 5% from, what, low 6s or whatever right now? I mean, just how impactful is just 100 basis points, 150 basis points, Mat, is what I guess I'm asking? And kind of your outlook for '24 as well.

Mathew R. Ishbia

Yes. Thanks for the question. Appreciate it, Steve. So real quick on that is how impactful. If rates drop 100 basis points, to your example, on 5% interest rates, there's a good chance our business doubles and our margins are higher. That's why I'm trying to explain to people that in '24, '25, '26, we'll make multiple billion dollars is our expectation. It just depends on when that happens. I don't control rates.
Now with the flip side, as a lot of people realize, when rates go down slightly like they just did, you take an MSR markdown. Still the reporters out there, not you guys because you're analysts, you understand what we're talking about, still the reporters say, "Oh, it looks like UWM lost money this quarter." We made a lot of money this quarter, the MSR mark going down $337 million. And still -- it's just silly people who don't understand the business. So just realize that when that happens, when rates drop 100 basis points, volume could double, margins could go up. And we'd make exceedingly amount of money, excessive amount of money and a really profitable product. Shareholders can do some great things.
However, the MSR mark will go down. And I'm sure some reporters that don't know what they're doing and talking about will headline, "UWM loses money or UWM only makes this Much money," because they don't understand the business. And so that's kind of my perspective on it is, yes, it will be a massive, massive uptick providing not just for us but for everyone else. And actually, it will help us. It will help a lot of other lenders even more because they're actually losing money right now and actually laying off people right now when we're hiring.
And we're actually winning. And as you saw, I'm guiding even to do more volume in the second quarter than in the first quarter. So a lot of positive at UWM. So it will help us significantly, but it will help a lot of other people, the whole industry. And so early '24, mid-'24 or late '24, I don't know when it's going to be, but it's happening. We all understand that. Anyone that understands the mortgage business or just the economy in general realizes that rates aren't going up too much more from all of our perspectives.

Operator

Your next question comes from the line of Bose George with KBW.

Bose Thomas George

Your market share obviously grew last year. Looks like, again, it grew in the first quarter. As you dial down programs like Game On, do you think we could see the share dip a little? How do you sort of see the share outlook?

Mathew R. Ishbia

Yes. Good question. My perspective, I think we're running around 30%, 32% market share pre-Game On. Game On was designed to help originators join the broker channel. It's been a massive success, thousands of loan officers joining, continuing to join. You're starting to see some of that production come through, starting to see some of the success come through. It's been fantastic. However, with that being said, with your question on market share, we went from 32%, I think, to 55% in the wholesale channel. That was more than we expected.
I said always that with Game On -- after Game On, which Q1 is after Game On, as you can see, if our margin stayed in the 40% range, that will be a massive success. I think you're going to see it higher than that is your point. And so if we're in the 40%, 45% range, then think about what we just did. We just went from 32% to 40%, 45%, a massive market share gain in a very tough market without the Game On pricing. And so just realizing that -- we're looking for -- if it stays in the 40% range, we think it's excessively successful. However, I think it's going to be even higher than that in the first quarter, just like it was in the fourth quarter.

Bose Thomas George

Okay. Great. And then just on the MSR sales, was that done at carrying value? Were there any sort of gains or losses on the MSR sales?

Mathew R. Ishbia

It's really tough to tell. There's some losses, it just depends on what day you sell it and what day you're marking it, comparing it to. If you're looking at from December 31, then there might be some loss. If you're looking at it from the day we sold it, there might be some gains. Like I don't know the exact details on each deal, but it's hard to really track it. That's why we just -- it's all part of the fair value markdown, which is a $337 million markdown.
And in reality, if you take that out of the $130 million loss, whatever the number is, we obviously, you can tell, from a core earnings perspective had an amazing quarter, as I pointed in my comments, even better in the first quarter. So once again, to the reporters that don't know what they're talking about, I'm sure there's some of you guys listening. You'll say that we made $450 million in the first quarter of last year, and this quarter we lost $130 million, whatever the number is. However, if you look at core earnings, we actually made more money in the first quarter this year than last year's first quarter.
And on top of that, we had less volume and lower margins but I still made more money. So think about how we're doing that. We're monitoring and managing our business beyond what other people understand. But headline news and clickbait doesn't explain that stuff. So it's good for you to understand and see that the first quarter has been extremely successful from that perspective.

Operator

Your next question comes from the line of James Faucette with Morgan Stanley.

Blake Netter

This is Blake Netter on the line for James. First off, I'm wondering what size mortgage market are you managing the business for? And are there any particular areas of the business where you (inaudible) efficiencies as origination volumes come in lower than expected?

Mathew R. Ishbia

Yes. So thanks for the question. I don't think origination volumes would come in lower than expected. I think they're going to be -- as I've described, I think it's going to be a great year from the way we look at and manage the business. And so all around, the mortgage market is definitely smaller than it was last year and the year before. However, most lenders out there have tried to right size their businesses.
Our business has been pretty sized well and prepared for scale. And so I'm more prepared for the future and what 2 questions ago was about, the '24 and '25, and the dominance that we're going to have -- show at that time. And so like I said -- I think we hired 100-plus people, hired -- joined this week alone. And so we're hiring people. We're growing, we're preparing for doubling this business over the next couple of years, right, from the volumes that you're seeing right now. And I'd be shocked if that didn't happen.

Blake Netter

Got it. And as a quick follow-up, on your MSR portfolio, you guys highlighted that delinquency rates in your servicing portfolio are lower than the industry average. That said, are there any pockets of the portfolio where you see risk rising? And as the broader macro environment normalizes, do you think you'll see a need to increase staffing and servicing to help manage loan workouts and modifications?

Mathew R. Ishbia

No. So if you look at our delinquency rate, I think we were the lowest -- or one of the lowest, I'll say one of them because I don't have everyone's data, one of the lowest delinquency rates in America. The loan quality -- we still don't do loans that everyone else does. Everyone else goes to 580 FICO scores or 550 FICO scores. They're all digging deep to try to just get a couple of loans. We're still at 620 FICO. We have the lowest delinquency rates or really low delinquency, I'll call it one of the lowest, and one of the highest FICO scores of anyone in the market.
And so our loan quality will get hit a lot less than -- or our delinquency get hit a lot less than everyone else. Do I see it being a massive issue in the industry? The answer is no, even without us being on the more conservative side of the credit profile. So I don't see it as a big thing. I think it's overblown, and I'm not as concerned about it as maybe other people would be talking. But in general, I think our book -- our servicing book is strong, our strategy is strong, and I feel really great about where we're at. But thank you for the question.

Operator

Your next question comes from the line of Eric Hagen with BTIG.

Eric J. Hagen

Hope you're doing well. I think a follow-up on the MSR. How are you guys thinking about the size of the MSR portfolio, what you consider to be maybe a sustainable and comfortable level for you to manage that -- the composition of that portfolio? I don't think we saw any MSR sales in the quarter, but how are you guys are thinking about that too?

Mathew R. Ishbia

Thanks a lot, Eric. I appreciate the question. They're actually worse than MSR sales in the quarter. But to answer you, I think what you're trying to figure out is how big our MSR book going to be, and so what I would tell you, I think it's going to be around $300 billion. And I always just tell people we're originating a lot of volume. I basically assume even with -- if we do MSR sales -- if we don't do MSR sales, I think the book basically stays plus or minus 10% to 15% of where it's at right now.
So if we don't do any sales, it will grow 15%, 20%, maybe. But if we do a bunch of sales, it could go down 10%, 15%. But basically, I think $300 billion seems like a good target. I think we're at $297 billion, I could be off quite slightly. But let's call it $300 billion. And that's kind of what we're looking at it going forward. So I look at it as -- it's been pretty consistent with that number.
Our liquidity is so strong right now that the need for selling MSRs is not there. As you can see, our cash position, which is a critical focus of ours, and Andrew does a heck of a job for us on that along with Blake and the team managing that. And so looking at those numbers, our liquidity is in a great position. So we don't need to sell any MSR. So our MSR book could grow. However, if someone wants to offer us a good price, and we're opportunistic out there, we will do it as long as we're doing the right things by our brokers and by our business and by our shareholders.

Eric J. Hagen

That's great detail. Can you say how many was the UPB of MSRs that you sold in the quarter was?

Mathew R. Ishbia

It's not that clean so I don't know the exact number because it doesn't really represent it. Because sometimes you're not selling the UPB, you're selling the excess servicing. And so therefore, it's really not actually any UPB because I still hold the servicing while I sold the excess, which is a capital markets transaction, if you think of it that way. So I don't have the exact -- if I told you we did $20 billion but we brought in $500 million, you'd say that, that math doesn't work out. That's kind of how I think about it. So it's not apples to apples. And that's why you got to just look at the overall MSR book as, hey, $300 billion plus or minus 10%, 15%, and it will probably be pretty consistent in that number.

Eric J. Hagen

Yes, yes. That's really helpful. One more. How are you guys thinking about managing the interest rate risk and the origination pipeline, I guess, both from the perspective of hedging the pipeline before delivery? And anything you're doing maybe to mitigate the higher interest expense from holding loans on warehouse?

Mathew R. Ishbia

Yes. I mean, so we hedge our pipeline every day. We don't take any risk on any of our pipeline. So that's been a constant for years and years and years. And so we try to be risk-free in that. And obviously, there's always risk when you're hedging and trying to handle things in the capital markets world. But we have an amazing capital markets team and feel really great about what we're doing there. So that's kind of how I think about that risk. I'm sorry, your second part of the question, Eric, if you're still on the line?

Eric J. Hagen

Yes, just mitigating -- anything you guys are doing to mitigate the higher interest expense from holding loans on warehouse and the NIM that you're kind of earning there.

Mathew R. Ishbia

Yes. So I mean, the interest expense, I know it's hard to see it, but it's actually pretty low relative to the market. However, we have debt. And so the interest expense includes that debt, and so a lot of that stuff there. But we're doing self-warehousing with some of our excess cash to drive that number down. And we'll continue to do that and take advantage of that opportunity because we have so much liquidity, and it's just sitting there. We're just sitting there looking at it.
So how do we use it? And Blake Kolo and his team and Andrew and his team do a great job of managing that. So I think the interest expense versus the interest income, the fact that it's a positive number shows that we're doing a really great job managing the because, remember, it's not just warehouse and loans, we have interest expense in there from our servicing -- not from our servicing, from our debt that we have out there.

Operator

(Operator Instructions) Your next question comes from the line of Doug Harter with Credit Suisse.

Douglas Michael Harter

This quarter, it looked like the G&A expense fell by a meaningful amount. I was just hoping you could give some detail as to what drove that.

Mathew R. Ishbia

Well, I think the reality, Doug, is we've been managing this for years. Everyone thinks -- everyone kind of wants to comment every time, "Oh, Mat's not laying anyone off." Of course, we're not laying anyone off. I'm actually hiring. But the G&A expense is not just people. There's a lot of things we manage. And once again, Andrew, our CFO, does a heck of a job, and I'll let him make a comment here in a second so he can give you any of his thoughts in addition.
But the reality is we manage our costs, we manage our business to the T, to the dollar, understand everything we're spending. And it's not people, which everyone likes to talk about. A lot of times it's the vendors. A lot of times it's negotiating new deals. And we've done a great job of that. And you'll actually see some of those things come through throughout the year that we've been working on, not just in the first quarter but last year, in the second, third and fourth quarter.
And so the way I look at it is -- the most important thing, Doug, to look at is operating core income. We made more money this year's first quarter than last year's first quarter. And last year's first quarter, we did significantly more volume, more gain on sale. So obviously, we're managing the business very well, and all these details are coming through in a positive way, as I said it would over the last 4, 5 quarters I've been getting that question. So Andrew, I don't know if you have any comments to throw in that maybe I didn't hit.

Andrew Hubacker

I think you covered it well, Mat. And I think on a sequential basis, it's down -- partially, there was a slight increase to our repurchase reserve in Q4 of last year. On a year-over-year basis, it's down a little bit, relatively flat. But Mat's comments remain the same.

Operator

Your next question comes from the line of Kevin Barker with Piper Sandler.

Bradley Michael Capuzzi

This is Brad Capuzzi on for Kevin Barker. It's nice to see you guys continue to guide to higher production, stable margins. Most of my questions have been answered. Just following up on Doug's question with G&A coming down. How do you guys view expenses going forward?

Mathew R. Ishbia

Well, I guess my perspective, depending on how you look at it, the volume is going to go up, right? And so there are a lot of expenses that are variable. So some of those numbers will go up. Obviously, we're going to continue to manage -- I just told you, we're hiring. So some of those expenses will go up. But overall, the thing I focus on, less on expenses and more on are we profitable. And we're extremely profitable. Core earnings were great, especially in one of the hardest markets. Because not only the first quarter was tough, but the fourth quarter ended in December was a slow month. And so that really bleeds into the first quarter across the board.
And so I feel really good about it. Are we managing expenses? Yes. Do I have more expenses that are coming out of the business that you guide -- that aren't tied to anything besides vendors and partnerships and things we have outside? Yes. But I will not sacrifice -- I'm not trying to save a dollar -- jump over dollars to pick up pennies. And so I'm going to make sure we run our business the right way. And if I'm going to make investments in people, in technology and in business strategies, we're going to continue to do that. So I spend very little time focused on expenses while we're making a lot of money.
What I do focus on is how do we drive revenue and help our brokers grow their business. When the brokers grow, UWM grows. And that's what's happening. That's why I talked at the beginning of the call about UWM LIVE! And I don't think you were there, but if you were at UWM LIVE!, you would have seen the broker channel, the camaraderie, the culture, the opportunity, the innovation and the upside. And I think you'll see some of that in the second quarter. We'll have a great quarter, as I already guided to. But on top of that, it's going to continue to roll. And so expenses is important. But if it's 1 of the first 5 things I talk about, then I'm not doing my job as a CEO because I'm jumping over pennies -- or dollars picking up pennies, and that's not who we are and never who we will be.

Operator

Your final question comes from the line of Michael Kaye with Wells Fargo.

Michael Robert Kaye

The Q1 gain on sale margin of 92 basis points was towards the high end of your guidance last quarter. But for Q2, you're still guiding to that original 75 to 100 basis point range. So the question is, why are you not taking more of that gain on sale momentum in Q1 and maybe top up the bottom end of that Q2 gain on sale margin guidance? Is it more control your own price program in Q2 or maybe other factors, like trying to provide extra pricing support for the brokers on spring purchase season? Or is this just more conservatism as you have a good track record of coming in toward the high end of the guidance?

Mathew R. Ishbia

Yes. I don't know if it's conservative. We always come in with our guidance, I say always, but we always have. It's been 10 quarters now, I believe, just like we're paying our dividend for 10 straight quarters. The way I look at it is I'm guiding you what I think the numbers will be. Margins can change, things can change up and down. We control how we price on a daily basis. But also there's different products at different margins, different opportunities. And so if you do more conventional, more government, more jumbo, margins are different on those different loan sizes.
And so I think the 75 to 100 is a good number. I would assume that's it's going to be in the middle of that number. Could it be a little on the lower end or higher end? That's why I guide -- gave 25 basis points. But we make sure -- the same thing with the $23 billion to $30 billion, could we be on the low end of that, the middle or the high? Like that's -- if I felt really confident we'd be in a different part of it, I'd guide to a lower number.
However, honestly, Michael, you know me, like I'm not that focused on exactly those guidance. I'm focused on running the business on a day-to-day basis. If I see an opportunity to do more volume and margins go down a little bit, I'll do it. If I see an opportunity for margins, we'll take advantage of that and maybe we'll do a little less volume. There's a lot of things we do. But the reality of our business is we're running it for the broker's success. We want to bring on more mortgage brokers to the channel. We want to help more brokers, loan officers grow their business. And we can do that in many ways. As you saw in UWM LIVE!, Michael, you were here, the training, the coaching, the opportunity to learn, that's available. But there's also things on price. There's also things on helping them do social media.
And so there's all these things we're doing. And so, I guess, a long way of saying, I feel confident $23 billion to $30 billion, I feel confident 75 to 100 basis points. And as I said at the very beginning of this call, in the trough of the mortgage industry, wholesale will be between 75 and 100. I think I said that last year and I'm saying it again this year. Now if the mortgage market comes out of the trough, then I will move the guidance up a little bit more. Or if it goes -- if it changes in a way, I'll move it up as we see fit. But that's my best estimate at this point, 75 to 100 and $23 billion to $30 billion. And I'm -- we're working extremely hard to hit those targets to make sure that we deliver what we tell you we're going to deliver, like we have every single time I've spoken on these calls. And I plan on continuing to do.

Michael Robert Kaye

So what would it take for you to be towards that bottom end of the guidance? So you're saying it's more of mix or maybe you'll push pricing programs more? I'm just trying to understand the delta, why would you go from like 92 basis points towards that low end?

Mathew R. Ishbia

Yes. I mean, once again, it's -- there's a lot of things that vary. There's things that happen maybe that pushed it up to 92 that could have made it at 78 this quarter, right? And there's things that could be -- make it -- next quarter, it could be 99 or 76, right? I have to give a range because gain on sale is not as clean. There's derivatives, there's a lot of different numbers coming in. There's a lot of different things. There's timing of issues when we sell loans. There's timing of hedges. There's market movements.
It's a lot more complex than just like, hey, you put a number on a piece paper and it just goes through. And so I want to give a little bit of a range for you. And so 75 to 100, I feel really strong about. And I will deliver that once again so you can be confident in that. But to try to narrow the view to the higher end or the lower end of the range, I'm not going to be able to do it for you, Michael, although I love you and I appreciate the question. 75 to 100, $23 billion to $30 billion, and I'll deliver once again for the 11th straight quarter of what I told you.

Operator

And you have a final follow-up question from Bose George.

Michael Edward Smyth

This is actually Mike Smyth on for Bose. You kind of hit on the UWM LIVE!, but I was wondering if you could just touch on kind of the opportunity set in jumbo or any other products for that matter just with some of the stuff going on with banks.

Mathew R. Ishbia

Yes. Thanks for the question. Appreciate it. And so, yes, I think jumbo is one of the spots that we're really focused on to hopefully help gain some opportunity for our broker community. The only reason a retail loan officer stays at a bank would be because, a, they can't generate any business themselves; or b, they do a lot of jumbo loans and sometimes banks can offer jumbo product as a loss leader. I think with some of the bank valuers recently, as we've talked about, I think some of the banks are able to back off that strategy a little bit, which actually gives an opportunity upside for UWM in the broker community. How that will play out, I don't know, to be honest with you. As you know, that's a focus and we'd like to figure it out. We don't have it solved yet.
But with that being said, that's all upside because right now our jumbo production is very low. On the product side, in general, we're looking for high-quality loans, like -- looking at high-quality loans that can be done faster, easier and cheaper because brokers, and findamortgagebroker.com, which is the website where consumers are going to, is growing. And we want to continue to drive people there and educate them that the fastest, easiest, cheapest way to get a mortgage is through a broker. They are the expert that will shop on your behalf. And if I can add a couple of more products, jumbo being one of the many -- better product with jumbo, will that help that website? Will that help brokers? Yes, yes. So we are working on it. But at the same time, that's all upside because what you saw in the first quarter and what you see in my guidance in the second quarter is assuming that, that's not really solved by that time.

Michael Edward Smyth

Great. That's helpful.

Mathew R. Ishbia

Yes. Thank you for the question. And I know that was the last question, I believe. And so I just want to say thank you to everyone who jumps on these calls. I appreciate your questions, I appreciate your thoughts. We appreciate all of you that came out to UWM LIVE! to really understand our culture and our team and the broker community. We're excessively -- exceedingly, if that's a better word, excited about the broker community. The broker community is growing and everyone that was at UWM LIVE, and a lot of you on this call, I see, saw it. And so hopefully, you guys feel that energy and that passion we have and the brokers have.
And so we're going to keep winning together. Q2 is going to be a heck of a quarter and we're excited to share with you. I'll be talking to you guys after the quarter. And if you have anything in between, Blake's available, I'm available, Andrew and our team. We appreciate you guys and gals. Have a fantastic day.

Operator

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