Guaranteed Rate loan programs aim for lower rates for builders, borrowers 

Mortgage lender and digital financial services company Guaranteed Rate hopes to court builders and borrowers with its newly launched programs — Lock ‘N’ Sell rate lock program and forward commitments – by helping the borrowers secure lower mortgage rates.

The rate lock program allows builders to lock in a current rate for up to 120 days on individual homes. This is done in advance of having a buyer in order to protect payments from going up in the current rate environment, Guaranteed Rate said in an announcement about the launch. 

The Lock ‘n’ Roll program is eligible for conventional and government fixed-rate loans, with the lock period being a minimum of 60 days, according to its website. The loan program can’t be extended, relocked or renegotiated until after the lender receives a fully executed sales contract and is only eligible for up to 30 days of extension. 

The program was launched “to take the guesswork out” for customers and curb concern about changes in the market affecting their ability to afford a home before construction is complete, Jim Colella, the national builder program manager of Guaranteed Rate, said.

Alternatively, builders with a larger number of houses can take advantage of forward commitments — which enable builders to reserve between $3 million and $20 million in blocks of mortgage loans at lower-than-market interest rates for up to 150 days, the Chicago-based lender said. 

Instead of reducing the price of the house, borrowers can take on a lower monthly mortgage payment by lowering the rate, Guaranteed Rate said. 

“By maintaining initial asking prices, builders can help keep current values in the neighborhood and ensure appraised values for buyers,” the company said in a statement. 

With 466 branches across the country, the lender has more than 1,910 active loan officers, according to mortgage data platform Modex. Guaranteed Rate originated $34.38 billion in volume in 2022, down 56% from the previous year’s production of $78.13 billion. About 71.2% of its transactions came from purchases and refis accounted for 27.1% in 2022. 

While rates have been on a declining trend after peaking in October, they are still higher than the 3% levels from 2021. Despite the decline in home price growth and projections of rates dropping, affordability challenges are expected to continue to weigh on buyers. 

In return, mortgage companies have been betting on programs that lower mortgage rates to unlock buyers on the sidelines. 

Products such as builder- or lender-funded temporary rate buydowns and ‘buy now and refinance later’ programs that waive closing costs or appraisal fees have been picking up steam against the backdrop of a higher rate environment.