Since going public in 2020, mortgage lender UWM Holdings (UWMC +5.17%) has experienced sharp declines in its operating performance and share price. As interest rates crept upward on the heels of high inflation earlier this decade, UWM's earnings plummeted.
UWM has attempted to recover several times in recent years, but the sluggish housing market has kept shares at lower prices. So far in 2026, shares have been trending upward once again.
Unlike prior false starts, this rally could persist, given several factors currently in motion.
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An improving macro backdrop could drive a further UWM Recovery
Interest rates are an important factor in home purchase demand. UWM is the parent company of United Wholesale Mortgage, America's largest mortgage originator, and a housing market recovery could lead to a material improvement in the company's operating performance. Mortgage rates are already at a three-year low, and a further drop may be forthcoming.
Even as the latest Federal Reserve commentary suggests that further cuts are on hold for now, another factor may positively affect mortgage rates. President Donald Trump posted on social media that his "representatives" should repurchase $200 billion in mortgage bonds, though it's unclear who the representatives are or whether Congress would need to be involved.
Now, I'm not saying that we should expect a rapid return to the post-COVID housing boom. However, lower rates could have a moderately positive impact on loan origination volumes and UWM's borrowing costs. This could have a material impact on the company's profitability. In turn, this could spark another sharp upward move for the stock.
NYSE: UWMC
Key Data Points
Company-specific catalysts are also on the table
Yes, further rate cuts remain uncertain, no matter what the Fed or Trump have to say on the matter. But even if macroeconomic improvements fail to materialize, UWM's other potential catalysts could still play out.
I'm talking about the company's massive shift into AI and automation. Once complete, the automation of loan underwriting and servicing could yield cost savings of more than $100 million. These cost savings could increase further if UWM completes its planned acquisition of Two Harbors Investment.
Two Harbors is a mortgage real estate investment trust (REIT), but it generates much of its income from its RoundPoint Mortgage Servicing subsidiary. Per the press release issued at the time of the Two Harbors deal announcement, total annual growth synergies from the combined companies could be as much as $150 million.
Should you buy UWM Holdings stock now?
UWM Holdings has surged nearly 40% since the start of the year, but it's still worthy of a buy. Trading at around 13.5 times forward earnings, shares currently appear to be fairly priced relative to other mortgage-focused financial stocks.
Even so, there's still a path for additional gains. Next month, UWM reports Q4 2025 earnings. Strong results, coupled with promising guidance, may further raise expectations. Investors could stay willing to bid up the stock, in anticipation of a continued recovery.
Considering potential total returns, by factoring in the stock's 6.9% forward dividend yield, much suggests UWM Holdings is one of the best financial stocks to own in 2026.
