Detroit-based mortgage giant Quicken Loans on pace to set home loan record

JC Reindl | Detroit Free Press

Mortgage giant Quicken Loans, one of Detroit's biggest employers, says that 2019 will go down as the best year in its history for overall volume of home loans.

Driven by lower interest rates that pushed more consumers to refinance their mortgages, Quicken Loans is on pace to originate more than $140 billion in mortgages for the year. That result would shatter the company's previous volume record of $96 billion set in 2016.

“It absolutely will be a record," Bob Walters, Quicken's president and chief operating officer, said Tuesday in a phone interview. "And it’s finishing strong. Usually this time of year there is a natural slowdown … but this year, we really aren’t seeing that."

A healthy Quicken Loans is ordinarily good news for Detroit. Quicken Loans is the biggest revenue generator in the business empire of Dan Gilbert, and since the firm moved its headquarters to Detroit from Livonia in 2010, profits from and investments by Gilbert's enterprises have helped to speed Detroit's revitalization — especially downtown.

Since late 2017, Quicken Loans has been ranked by industry publications as the nation's No. 1 direct-to-consumer mortgage lender, ahead of Wells Fargo and Bank of America.

More: How Dan Gilbert has made Quicken Loans thrive in mortgage industry

However, in the highly fragmented mortgage industry, where consumers can visit some 30,000 bank branches and credit unions for a home loan, Quicken commanded a market share of just 5.7% in the third quarter, according to Inside Mortgage Finance.

Walters said Quicken's market share could rise to about 7%.

Like mortgage lenders across the country, Quicken benefited from the surge in refinancing activity that kicked off in late winter and early spring once rates began falling.

The fixed rate on a 30-year mortgage was 4.4% in March, sliding down to 3.5% in September, according to data from Freddie Mac. The rate was about 3.7% last week.

With its online-only business model, Quicken Loans has traditionally performed well when consumers are doing a large amount of refinancing.

The Mortgage Bankers Association expects mortgage refinancing originations to total about $796 billion this year, a 70% increase from 2018. And the share of refinancing activity rose to 38% of all originations compared to 28% last year.

Quicken Loans does not disclose the amount of refinancing business it does in comparison to home purchase mortgages.

"I will say that with interest rates falling, refinance has skewed higher than in the past," Walters said, "but we don’t give out the exact numbers."

This year's refinancing surge was a surprise for some mortgage lenders such as Wells Fargo, which scrambled to hire this year after having cut hundreds of jobs last year in expectation of a mortgage business slowdown, according to Reuters.

Even though Quicken Loans never did any mass layoffs, Walters said the firm still needed to hire a lot more people this year and that its employee count is up about 3,500 people year-over-year. The majority of those new hires happened in Detroit, he said.

"It’s been a huge influx and obviously great for us and great for the city," he said.

Walters said that Quicken's total headcount is only slightly higher than when it hit its previous mortgage volume record three years ago. Quicken says it employs about 18,000 nationwide, more than 15,000 in Detroit.

“We’re able to process and close more loans per person," Walters said. "So that’s why we’re able to do $140 (billion), $145 billion with a relatively similar number of people as we had a couple years back.”

Yet the excitement of a phenomenal year has been tempered by concerns for Quicken's founder and chairman Gilbert, 57, who suffered a stroke during Memorial Day weekend. Gilbert has made no public appearances since then and has yet to return to his regular day-to-day work routines.

"He’s improving all the time," Walters said about Gilbert's recovery. "He’s focusing on himself at this point."

Founded in 1985, Quicken Loans is classified as a nonbank mortgage lender because it doesn't function as a traditional bank that takes deposits and offers checking accounts.

Among the 25 largest originators, nonbanks now do about 51% of all mortgages, up from 10% in 2009, according to the Financial Stability Oversight Council.

Contact JC Reindl at 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.