United Wholesale Mortgage has been aggressively price-cutting loans to put pressure on competitors for months now. It appears they’ve just thrown gas on the fire in the hopes of boosting their second quarter numbers, while hitting their rivals ahead of earnings call season.
UWM said on Monday that they’ll price-match any conventional loan on primary residences up to 35 basis points with that of 15 different competitors: Caliber Home Loans, Cardinal Financial, Citizens Bank, Finance of America Mortgage, Flagstar Bank, Freedom Mortgage, Guaranteed Rate/Stearns, Homepoint, Homebridge, loanDepot, New Rez, One American Bank, Parkside, Penny Mac, Plaza Mortgage. UWM’s price-matching guarantee will be in effect between June 7 and June 20.
In a video message sent to mortgage brokers, UWM CEO and President Mat Ishbia said the price-matching guarantee and combination of UWM’s service, technology and speed-to-close means there’s no reason to lock a loan anywhere else in June.
“We’re unmatched in a lot of those areas, but sometimes, somebody might have a better price on this loan or on that loan,” Ishbia said. “I’m done with it. UWM from June 7 to June 20th, we’re gonna match any price, up to 35 basis points of a competitor, someone that you work with, one of the top 15 lenders that do what 90% of the business. If you’ve [worked with one of the 15] in the last 90 days, and they have a better price than UWM on a conventional primary residence, we’re going to match it.”
The initiative applies to any conventional loan on primary homes, including high-balance adjustable-rate mortgages, UWM said. The lender also said only new locks are permitted; brokers would not be allowed to apply lock transfers or relocks. The pricing initiative matches competitors’ 30-, 45-, and 60-day locks vs UWM’s 15-, 30- and 45-day locks.
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“Relocks and changes to program, occupancy or property type will be subject to worst-case pricing,” the lender said in a statement Monday.
UWM has been outspoken about capturing the opportunity that it sees in the wholesale market, which it believes can be about one-third of the overall mortgage market by 2025. It currently has about 35% of the wholesale market, and is eyeing 50% in the next few years.
UWM made its most aggressive play in early March when it told brokers they could not continue to work with both Rocket Pro TPO or Fairway Independent Mortgage and still work with UWM.
Since issuing its ultimatum to brokers, the lender has shown a willingness to drop prices to increase its slice of the pie. Where UWM was not previously in the top 10 on pricing on LoanSifter, it is now a mainstay.
It would appear that UWM is betting that its slim model — analysts have estimated UWM’s cost to originate a loan around 50 basis points, the lowest in the country — will muscle out competitors that won’t want or be able to sustain lower margins. UWM had $1.6 billion in cash on hand at the end of the first quarter of 2020.
With the exception of broker-only lender Homepoint, 14 firms also operate outside the broker channel.
UWM didn’t mention Rocket Mortgage, its biggest rival, in its price-matching promotion.
Rocket has also been sweetening the pot for brokers as the mortgage market slows down. On March 10, the lender began its “broker freedom” promotion, which gave brokers a 35 bps credit on all loans, whether they were primary, secondary or investment. A month later, it increased the promotion to a 50 bps credit on all loan types.
Asked why UWM didn’t include Rocket in the list of 15 lenders it would match prices on, a spokesperson said simply, “It’s because UWM clients do not do business with Rocket.”