How Chase, BofA, Wells are luring borrowers in a 7% market
With mortgage rates sidelining homebuyers, major banks are looking for ways to spark activity.
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“A 7% mortgage rate sounds profitable for banks until you look at everything happening around it,” said Jeffrey Edwards, founder and CEO of FFERM Technologies. “Banks are facing fewer originations, expensive deposits, low-yielding assets that remain on their books longer and borrowers taking on greater future payment risk. Those pressures cannot be measured separately because one can quickly amplify the others.”
Some banks have launched affordable homeownership programs, while others are running limited-time rate sales as a result.
Below is a roundup of what the top depositories are currently offering mortgage borrowers.
Chase Home Lending relaunches rate sale
Chase Home Lending, the mortgage division of JPMorgan Chase, is running a limited-time rate sale from Sept. 14 through Oct. 4. Homebuyers and homeowners across the country can lock in a discounted rate on all new mortgage purchase and refinance loans from Chase.
The sale is available for both new and existing customers, and qualified borrowers could receive up to 0.25% off their rate, although it varies by state. The discount can also be combined with other Chase offers, grants and discounts, the bank told National Mortgage News in an email.
Chase first launched a weeks-only sale a little more than a year ago, and has now brought it back twice since.
Citizens Bank expands product suite
Citizens recently rolled out its nonagency expanded offering, designed to serve borrowers with more complex financial profiles. It also added state-specific affordable homeownership programs, including the Pennsylvania Housing Finance Agency bond product and Connecticut Housing Finance Authority’s Time To Own program.
All are permanent fixtures in the bank’s mortgage product portfolio.
“Homebuyers have increasingly diverse financial situations, and we’re focused on providing solutions that meet customers where they are,” Raman Muralidharan, head of mortgage at Citizens, told National Mortgage News. “Our expanded nonagency offering helps address the needs of qualified borrowers whose circumstances may not fit within traditional lending frameworks.”
The launch also marked the implementation of Polly, the bank’s new product and pricing engine. It enhances Citizen’s ability to bring future product and pricing changes to market quicker and support more dynamic pricing decisions, Muralidharan said.
Bank of America’s affordability programs
Bank of America offers multiple cost-saving tools to help buyers in today’s market. For example, it provides grants of up to $17,500 that help eligible buyers cover upfront down payment and closing costs through its Community Homeownership Commitment program.
Borrowers can use these grant funds to permanently buy down their mortgage interest rate, securing lower monthly payments for the life of their loan, Matt Vernon, head of consumer lending at Bank of America, told National Mortgage News. Since introducing the program, the bank has delivered over $15 billion in affordable home loans to more than 57,000 homebuyers.
Existing customers can also leverage BofA Rewards to receive home loan perks, including origination fee reductions and interest rate discounts.
Wells Fargo rewards valuable relationships
Wells Fargo offers perks primarily to existing customers. Borrowers can earn a rate discount or closing cost credit when they have eligible assets with the bank. Benefits are based on the combined balances of eligible accounts and any funds added before the mortgage is final, according to its website.
“Whether that’s helping customers secure relationship-based pricing benefits, delivering on closing date guarantees for purchase customers, or working with builders to provide rate buydowns to their customers, we’re looking for ways to simplify the mortgage process and deliver predictable outcomes,” Sandra Ho, head of sales and strategy execution for Wells Fargo Home Lending, told National Mortgage News.
Navy Federal Credit Union provides rate protection
Navy Federal also brings new offerings to help mortgage borrowers reduce costs. Of the products available is a no-refi rate drop, which allows eligible borrowers to lower their mortgage rate after at least six consecutive on-time monthly payments without refinancing. The new rate must be at least 0.25 percentage points lower, and each reduction costs $250, a spokesperson told National Mortgage News.
Additionally, Navy Federal offers a no-cost freedom lock, in which borrowers receive a 60-day rate lock and may request up to two reductions if rates improve, with a maximum combined decrease of 0.25 percentage points. The credit union will also match an eligible competitor’s locked rate or provide a $1,000 incentive if the member closes with that competitor.
Navy Federal relaunched its Homebuyers Choice loan at the beginning of the year as well. New features include: Competitive rates for first-time homebuyers and those with lower credit scores, flexible down payment options, waived funding fee with a 3% down payment and Private Mortgage Insurance is not required.
