As mortgage rates move higher again and hit levels not seen in months, one of America's largest home lenders says it's taking things far in the other direction.
United Wholesale Mortgage — the company that recently announced a 15-year fixed-rate mortgage with rates as low as 1.875% — has now unveiled a 30-year fixed-rate loan that starts at just 1.999%.
UWM says its new deal offers potentially huge savings for borrowers.
"Roughly speaking, this means a consumer with a $300,000 home who puts down 10% and refinances from a 3.14% to 1.999% interest rate can save nearly $128,785.56 over the life of the loan," UWM said, in an email.
But can anybody get a 1.999% mortgage? Is there a catch?
Rates far below the average
The rate on UWM's loan is way below the current average rate for a 30-year fixed-rate mortgage: 3.14%, according to Mortgage News Daily. Though rates are still incredibly low, historically speaking, they're the highest since early June, MND's data shows.
Mortgage rates spiked late in the week after Fannie Mae and Freddie Mac — the government-sponsored mortgage giants that buy or back most U.S. home loans — announced a new 0.5% fee on refinances, starting Sept. 1.
The surprise fee will force lenders to pay tens of millions of dollars on loans already in the pipeline, explains Matthew Graham, MND's chief operating officer. "In turn, this forces lenders to raise rates for new loans to make up for that lost revenue IN ADDITION to applying the new half-point fee," he writes.
How can UWM, the second-biggest mortgage lender in the U.S. after Quicken Loans, offer rates that are more than 1 full percentage point below average? One reason is it's a mortgage wholesaler: It doesn't offer loans directly to the public, but through mortgage brokers.
That allows the company to save on advertising and other overhead.
The new 30-year loan, which is part of UWM's ongoing Conquest low-cost mortgage program, is available to both homebuyers and refinancing homeowners who haven't closed on a United Wholesale Mortgage loan in the last 18 months.
"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," Mat Ishbia, UWM's CEO, told Housing Wire.
Does the ultra, ultra-low mortgage rate have a catch?
With a 1.999%, 30-year mortgage, there has to be some kind of catch, says Dan Frio, manager at Preferred Rate in Oakbrook Terrace, Illinois. He says it reminds him of something you might come across while driving.