United Wholesale Mortgage Tuesday announced that it offers conventional mortgage rates of as low as 1.99%, but brokers warn this rate is not for every borrower, or even the majority.
“You will not find a loan without cost in the low 2s as well as high 1s,” mortgage broker Jason Barlow explained in an interview with HousingWire.
That’s because when lenders go to take out a mortgage, they pay for their rate.
While a rate of 1.99% could cost a borrower thousands of dollars more on their loan, if they plan to stay in their home for several years, the lower rate could make sense over time.
“Economically, what these rates do from an investment perspective over time makes a lot of sense,” according to Barlow.
UWM CEO Mat Ishbia explained that a $ 300,000 mortgage for the right lender could cost about $ 4,000 more to get the lower rate of 1.99%. However, he warned that these figures will ultimately be determined by the profile of the lenders and what agreement they will reach with the broker.
Barlow worked up a scenario and said a loaner with 60% LTV and an excellent credit score might pay around $ 5,000 for a rate of 2.125% on a $ 470,000 loan, while they would pay close to $ 10,000 for a 1,999%.
“We have seen other wholesale financiers follow suit with UWM, but UWM certainly seems to be taking the lead in offering progressive lower rates,” Barlow said.
Barlow also pointed out that while many lenders may not benefit from the 1.99% rate, lowering rates this low also lowers other mortgage rates to the low 2s for a variety of types of lenders.
Ishbia said this initiative will help to buy and refinance mortgages for the brokerage community.
“We want to make sure that our brokers have all the benefits to win as many loans as possible, that we are excited to do that and a great deal to many consumers,” said Ishbia.
This rate comes less than two weeks after the company announced a rate of 1.875% for its 15-year mortgage. For the 15-year mortgage, UWM outlines circumstances such as having a FICO score of at least 640. Also, high balance payments and loans are not eligible and the product is only for property owned properties, according to a mortgage broker who ‘ t refused to identify.
About two weeks ago, Quicken Loans advertised a ‘limited time’ rate of 1.99% on 15 year mortgages, and according to one broker, Loan of parking en Stearns Loan offer a 15-year fixed rate as low as 1.75% to some mortgage lenders, depending on the relationship. HousingWire reached out to Quicken, Parkside and Stearns for comment without response at time of publication.
