Happy almost Thanksgiving, LOs!
I know that you're probably tired of hearing this, but all predictions are pointing to a purchase-heavy market going forward.
In preparation, a few big shops have introduced products to help them gain some purchase traction.
Specifically, adjustable-rate mortgages (ARMs) seem to be getting the most attention, with United Wholesale Mortgage rolling out prime jumbo ARMs earlier in the month.
The top-ranked wholesale lender noted that their prime jumbo ARMs will allow brokers to offer "competitive pricing" on five-, seven- and 10-year adjustable-rate mortgages.
Meanwhile, Homepoint, a Michigan-based wholesale lender, also moved this month to introduce SOFR ARMs to its nationwide network of mortgage broker partners.
"If rates are over 4%, ARM products are much better because you can get borrowers for the first three or five years at an interest rate close to 3.5% and that's when you see people taking those mortgages," an LO said during an interview with HousingWire.
ARM products are also beneficial for borrowers looking to buy properties that they don't plan on keeping long-term.
However, the LO added that there are some drawbacks with ARM products, "mainly that after the initial term, interest will adjust every year, so you don't know what your interest will be in the future and your mortgage payment will go up."
"If you take an ARM product right now, there will be a high chance that once you get your mortgage rate adjusted, your mortgage payment will be much more," he said.
Tell me LOs, are your shops introducing ARM products? Do you see this product gaining popularity in the months to come? What are some other drawbacks to ARMs? And finally, what other purchase products do you foresee gaining popularity in a higher rate environment?
Give me a shout, anonymously of course, at mvolkova@housingwire.com
Maria Volkova
Mortgage Reporter, HousingWire
EmoticonEmoticon