UWM 1.99% 30-year mortgage rate comes with a catch

United Wholesale Mortgage announced Tuesday it is offering conventional mortgage rates as low as 1.99%, but brokers warn this rate isn’t for every borrower, or even the majority.

“You won’t find a no-cost loan in the low 2s or high 1s,” Mortgage Broker Jason Barlow explained in an interview with HousingWire.

That’s because when borrowers 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 are planning on staying in their home for several years, the lower rate could make sense over time.

“Economically, what those 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 borrower could cost around $4,000 more to get the lower 1.99% rate. However, he cautioned that these numbers are ultimately determined by the borrowers’ profile and what agreement they come to with the broker.

Barlow worked up a scenario saying that a top tier borrower with 60% LTV and an excellent credit score might pay around $5,000 for a 2.125% rate on a $470,000 loan, while they would pay close to $10,000 for a 1.99%.

“We have seen other wholesale lenders follow suit with UWM, but UWM certainly seems to be leading the way in offering progressively lower rates,” Barlow said.

Barlow also pointed out that while many borrowers may not benefit from the 1.99% rate, dropping rates this low also lowers other mortgage rates to the low 2s for a variety of borrower types.

Ishbia said this initiative will help increase purchase and refinance mortgages for the broker community.

“We want to make sure our brokers have every advantage to win as many loans as possible, so we’re excited to do that and offer a great deal to a lot of consumers,” Ishbia said.

This rate comes less than two weeks after the company announced a 1.875% rate for its 15-year mortgages. For the 15-year mortgage, UWM outlined conditions such as having a FICO score of at least 640. Also, cash-out and high-balance loans are not eligible and the product is only for owner-occupied properties, according to a mortgage broker who declined to be identified.

About two weeks ago, Quicken Loans advertised a “limited-time” rate of 1.99% on 15-year mortgages, and according to one broker, Parkside Lending and Stearns Lending are offering a 15-year-fixed rate as low as 1.75% to some mortgage brokers, depending on the relationship. HousingWire reached out to Quicken, Parkside and Stearns for comment with no response at time of publication.

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