Nonbank lenders originated fewer mortgages year over year in 2023 as the high interest rate environment continued to weigh on the mortgage lending space.

In that year, nondepository institutions funded $976.56 billion in mortgages, compared with $1.446 trillion in 2022, according to newly released Home Mortgage Disclosure Act data collected by S&P Global Market Intelligence. The loan approval rate at such lenders fell to 49.9% from 51.1%, with $946.14 billion in unapproved applications.

Nonbanks accounted for 55.0% of funded loans in 2023 versus 50.7% in 2022. Meanwhile, banks and thrifts, which originated $623.53 billion in mortgages in 2023, accounted for 35.1% of funded loans, compared with 39.6% a year ago.

Across all lender types, mortgages originated in 2023 totaled $1.777 trillion, notably down from $2.845 trillion in 2022 and lower than the amount of unapproved applications in 2023, which was $1.982 trillion.

Top originators

UWM Holdings Corp. was the top mortgage lender in 2023, ending Rocket Mortgage LLC's yearslong winning streak. UWM funded $108.48 billion in mortgages during the year, down 14.9% year over year, with a 74.6% approval rate and 6.11% market share.

In 2023, UWM had its best purchase year of all time amid "the doom and gloom that many others have espoused."

"Purchase business continued to lead the way as our total 2023 purchase originations were higher than both 2022 and 2021, even with the higher interest rate environment for all of 2023 and the significant decrease in industrywide origination volumes," Chief Accounting Officer and CFO Andrew Hubacker said on a Feb. 28 earnings call.

Rocket Mortgage nabbed the second spot among mortgage lenders, recording $76.26 billion in funded mortgages, a 40.2% drop from the prior year. The Rocket Cos. Inc. unit's market share was 4.29%, versus 4.49% in 2022, and its loan approval rate was 71.4%, up 1.7 percentage points year over year.

On a Feb. 22 earnings call, Rocket CEO Varun Krishna lauded the company's "strong" 2023 fourth-quarter and full-year performance, which it achieved "against the backdrop of extreme market challenges as the industry faced persistent constraints in affordability and inventory."

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In terms of market share, loanDepot.com LLC ranked No. 10 overall and No. 6 among nonbanks, recording $21.48 billion in funded mortgages in 2023, down 59.1% from a year earlier. The loanDepot Inc. subsidiary expects an improvement in market volumes in 2024 to help it return to profitability.

"Higher mortgage market volumes, together with our successful implementation of Vision 2025 imperatives, are expected to provide foundational support as we push to achieve our goal of returning to profitability," loanDepot CEO and President Frank Martell said on a March 12 earnings call.

PennyMac Loan Services LLC was ranked No. 22 among all institutions, with its funded mortgages dropping 39.0% to $13.49 billion. The company's parent, PennyMac Financial Services Inc., expects that its total originations will go up to more normalized levels when the Federal Reserve cuts rates, CEO and Chairman David Spector said on an April 24 earnings call.

PrimeLending a PlainsCapital Co., a subsidiary of Hilltop Holdings Inc., was part of the top originators list with $7.82 billion in funded mortgages, a 35.3% drop year over year. In the 2023 fourth quarter, PrimeLending's results were affected by "continued low inventory, seasonality, escalating home prices and notably higher interest rates," Hilltop President and CEO Jeremy Ford said on a Jan. 26 earnings call.

Biggest movers

Loan Store LLC recorded the highest increase in funded mortgages among nonbank mortgage originators with over $500 million in funded loans, with its funded mortgages rising 2,182.9% year over year to $1.47 billion in 2023. Logan Finance Corp. followed with a 255.4% increase in funded loans to $980.2 million.

JLL Real Estate Capital LLC was also among the biggest gainers and logged the highest increase among the top 20 nonbank mortgage lenders. In 2023, the company recorded $11.78 billion in funded mortgages, up 180.5% from the prior year.

On the other hand, Caliber Home Loans Inc. booked the highest percentage decrease in funded mortgages on a year-over-year basis, followed by Cherry Creek Mortgage LLC. Caliber Home Loans' funded loans plummeted 88.0% to $3.54 billion and Cherry Creek Mortgage's fell 85.2% to $597.7 million.