United Wholesale Mortgage (UWM) rolled out a new adjustable-rate mortgage (ARM) product for jumbo loans in an effort to provide brokers more options in a highly competitive mortgage origination market.
UWM’s Prime Jumbo Max pricing offers a seven- or 10-year ARM with a rate/term and cash-out refi for a maximum loan amount as much as $3 million, with a maximum loan-to-value ratio of 80% and minimum FICO score of 700, the wholesale lender said.
“In a rising rate environment, interest in ARMs is starting to increase and UWM is continuing to provide our brokers with competitive and diverse products that will allow them to dominate their markets and further strengthen their relationships with realtors and borrowers,” said a UWM spokesperson.
This is the second jumbo ARM the Michigan lender has introduced in the last year. In November, it launched a prime jumbo loan product on five-, seven-, and 10-year ARMs, with a minimum FICO score of 680. Whereas the November jumbo ARM product required one appraisal for purchases up to $3 million, the new iteration requires on appraisal for loans up to $1.5 million and two appraisals from different appraisers for loans above $1.5 million. Both jumbo ARM products will be available for brokers.
Although UWM and other nonbank depository lenders have gotten into ARMs of late, the ARM market is largely dominated by depository lenders.
“I’ve lost a lot of business lately to the depository companies as their ARM products and jumbo products are way better,” one mortgage broker told HousingWire earlier this month. “Also, credit unions’ ARM products are ridiculously low. I just bought a home at 3.375%, 0.5% discount point, and all closing costs paid for by them.”
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Application volume for ARMs hit a 14-year high in May, taking up nearly 11% of the entire mortgage application, compared to just 3% at the beginning of 2022, Mortgage Bankers Association (MBA) said. The share of ARM applications was 9.5% last week.
UWM launched a total of five jumbo loan products earlier this year as housing prices for many borrowers rose beyond conforming mortgage loan limits, according to Ishbia. “This means you get to have a great jumbo opportunity, and jumbo borrowers and cash-out borrowers need your help,” he said.
Relatedly, UWM last month rolled out what it dubbed ‘Game On’ pricing that cut prices of all loans between 50 to 100 bps points.
Mortgage analysts say it’s a strategy designed to put the squeeze on competitors and increase market share in the long term, even if it results in short-term pain.
In the first quarter of 2022, UWM posted a profit of $453.2 million, which was boosted by a $172 million increase in the fair value of mortgage servicing rights (MSRs).
UWM originated $38.8 billion in mortgage loans in the first quarter of 2022, almost a 30% drop from the previous quarter. The lender forecasts loan production of between $26 billion and $33 billion for the second quarter. UWM will release second-quarter earnings results on Aug. 9.