United Wholesale Mortgage announced Tuesday it is rolling out a loan program that offers borrowers mortgage rates as low as 1.99% for both purchases and refinances.
The rate is only available through independent mortgage brokers, the company said in a statement.
On July 31, the company announced a 1.875% rate for 15-year mortgages. We dive deeper into requirements to get that rate and other lenders offering similar rates in the story: Making sense of ultra-low mortgage rates.
The UWM 30-year rate is almost a full percentage point below the 2.88% average U.S. mortgage rate for last week, as measured by Freddie Mac, the lowest in a data series that goes back almost five decades.
Mortgage rates have tumbled since March when the Federal Reserve began buying bonds to support the economy during the COVID-19 pandemic. The Freddie Mac average rate, the oldest measurement of mortgage data, has hit record lows eight times this year.
The Fed started buying Treasuries and mortgage-backed securities to grease the wheels of the credit markets and avoid a repeat of the credit crunch seen during the 2008 financial crisis.
“I never thought I would see a rate starting with a 1, but I also never thought I would see a worldwide pandemic, and that’s what it took,” said Matt Rasetta, who owns Superior Rate Mortgage of New England.
“It means mortgage brokers like me are going to make a lot of money because so many people will refinance, but it’s the silver lining of a not-too-great situation for the rest of the world,” Rasetta said.
Low mortgage rates like the one being offered by UWM have spurred demand for real estate and supported home prices during the recession caused by the COVID-19 pandemic.
U.S. existing-home sales rose 21% in June, the biggest monthly gain on record, and the median price rose 3.5% from a year ago, the National Association of Realtors said in a July 22 report.
Lenders qualify applicants by the amount of the monthly payment measured against their income, and when financing costs go down the payment shrinks. That also means borrowers often find they qualify for larger mortgages, which means they can pay more for a property they want.
While details on the 1.99% program are limited, when UWM announced they were offering 15-year fixed rates as low as 1.875% they outlined conditions including 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.
(Editor’s note: Story is updated with comment in the seventh paragraph.)