Rocket preemptively raises 2023 conforming loan limits for brokers

The wholesale arm of Rocket Mortgage on Tuesday raised anticipated agency conforming loan limits to $715,000, a sign that the nation’s largest mortgage lender is confident the maximum loan limit set by the federal government will rise by at least 10% in 2023.

The increased loan limits for mortgage brokers apply to new registrations and locks effective Sept. 6, the lender said Tuesday. They’ll require a full appraisal.

Rocket’s gambit comes during one of the company’s most challenging periods in memory, and could enable the Detroit lender to win much-needed purchase business through brokers during a critical period of an ugly year.

“What you’re seeing is lenders getting out of wholesale,” said Austin Niemiec, executive vice president of Rocket Pro TPO. “We’re leaning in and investing while others are getting out … Being the first to market, building the tech and getting it into brokers’ hands is one example.”

As mortgage rates climb to the mid 6% range and home values continue to increase, the new conforming loan purchase limit will offer better pricing, require a smaller down payment for home purchases and easier documentation compared to a jumbo loan, Rocket said. 

The conventional loan limit for 2022 is a baseline of $647,2000 for one-unit properties, rising to $970,800 in high-cost areas as well as Alaska and Hawaii.

Rocket said its new loan limit is $1.073 million for agency-eligible properties in Alaska and Hawaii, which, at 150% of the baseline limit, suggests the ceiling on Fannie Mae and Freddie Mac purchased loans overall will eclipse the $1 million mark in 2023.

It was always expected that lenders would increase loan limits ahead of the Federal Housing Finance Agency‘s November announcement, though Rocket’s move appears to be the earliest push yet. Lenders last year didn’t raise anticipated conventional loan limits until early October, when rates were still in the low 3% range.

United Wholesale Mortgage and PennyMac were the first lenders to announce their conforming loan ceiling hike by 14% in 2021. Rocket Mortgage and Homepoint made their announcements the following week.  

The risk for Rocket and those that follow is limited; the Housing and Economic Recovery Act established a formula for increases in 2008 that mandated that the baseline could only rise after home prices returned to pre-recession levels. That condition was finally met in 2016 when the FHFA increased the conforming limits for the first time in a decade. 

As the wholesale lending space faces increased competition with UWM’s Game On pricing initiative, Rocket Pro TPO also plans to diversify its product portfolio by offering home equity loans in mid-September. 

Speaking to HousingWire earlier this month, Niemiec emphasized consistent pricing and long-term growth for brokers, saying the company won’t “play games or gimmicks, temporary flash things for marketing purposes.”

Following UWM’s initiative to increase market share by cutting prices of up to 100 basis points across all types of loans, lenders including AmeriSave and loanDepot exited the wholesale channel. More lenders that don’t have enough capital are expected to fall victim to UWM’s aggressive price cuts. 

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