The two remaining large non-bank mortgage lenders that boost their conforming limits well in advance of the Federal Housing Finance Agency's annual announcement have gone even higher than the competition in raising their preliminary thresholds.
The move comes as the
The purchase component was 19% lower while the refinance index was 65% lower.
What could be happening with mortgage rates
This news arrived also just prior to
After the announcement, which was followed by a press conference from Fed Chair Kevin Warsh, the 10-year Treasury rose from its low on the day near 4.94% to close Wednesday at 5.01%.
United Wholesale Mortgage is raising its one-unit conforming limit to $847,440. At Pennymac, the new limit will be $850,000 across all of its channels.
Last Thursday,
All loans originated above the current conforming limit of $832,750 need to be held on the lender's balance sheet. The Federal Housing Finance Agency uses a formula set by law and announces the change in November, with its limit taking effect on Jan. 1.
"This lets homebuyers avoid jumbo loan territory now, instead of waiting until January 2027," Doug Jones, Pennymac's president and chief mortgage banking officer, in a press release. "This means real dollars back in homeowners' pockets today and the most competitive product our partners can offer their clients right now."
The MBA survey, which covers the period ended Sept. 11, had the conforming mortgage averaging 6.97% and the jumbo rate at 7.03%.
However, Optimal Blue data for Sept. 15 put the conforming average at 7.014% and the jumbo at 6.985%.
But the qualification standards for conforming loans are more consistent than for jumbo, industry participants noted in the past.
National Mortgage News reached out to Rocket, Rate and CrossCountry to see if they were going to change their limits to meet the competition's higher ones.
Rate balancing expanded opportunities versus risk
"We're already originating loans up to the projected $845,000 conforming limit and feel comfortable with that approach," Jeremy Collett, chief capital markets officer at Rate, said in a statement. "For several years, we've modeled future loan limits using home price appreciation trends, and that methodology has proven reliable."
Rate also has to balance the opportunity to expand financing options for borrowers in today's high home price environment with a prudent risk management strategy.
"Overestimating the eventual conforming limit could create significant liquidity and execution risk for loans that later fall outside the agencies' final eligibility standards," Collett said. "We'd rather give our customers the benefit of higher limits while remaining disciplined in how we manage that risk."
Still, as additional home price data becomes available, Rate reserves the right to adjust the early conforming loan limit, he stated.
Rocket and CrossCountry have not yet responded to the request for comment.
Analyst reaction to Pennymac's guidance
Pennymac provided some guidance on its third quarter origination and servicing on Sept. 14, prior to a presentation at an investor conference the following day.
"Through the first two months of the quarter, PFSI reported $16.6 billion in funded volume and $18.2 billion in locks," Douglas Harter of BTIG said in a research note. "If we straightline this pace for September (which could be optimistic given the move in rates), fundings would be down 29% Q/Q and locks would be down 25%."
Before this guidance, BTIG had expectations for a 20% decline in funding and a 14% drop in locks.
Stephens analyst Kyle Joseph broke the originations out by channel.
Correspondent originations were $10.5 billion quarter to date, versus $22.3 billion three months ago. Stephens estimated $18.5 billion for the current period. Broker production came in at $3.7 billion compared with $7 billion in the second quarter. Joseph had predicted $5 billion. Direct-to-consumer came in at $2.4 billion, with Stephens looking at a $6.6 billion third quarter estimate. In the second quarter, Pennymac generated $5.6 billion.
UWM expands non-warrantable condo guidelines
Meanwhile, in a separate product announcement from UWM, the wholesaler expanded its eligibility criteria for non-warrantable condominiums. These are loans made to owners in
The UWM website said the following characteristics, which are considered to be non-warrantable, are acceptable:
· Commercial space up to 50%
· Reserve study required only when reserve allocation is below 3%
· Up to 25% of owners may be 60-plus days' delinquent
· Non-incidental business income permitted
· Homeowners association as plaintiff litigation permitted if it doesn't involve structural, safety or marketability issues
· Mandatory membership fees allowed
· Condotels eligible if additional requirements are met
