Wholesale mortgage prices are those rates quoted by wholesale lenders to mortgage bankers and other, smaller, lenders. These rates are not available to the general public, and are available only to those clients whom the lender has approved.
The Borrowing Public
The mortgage rates the general public pays are determined by combining the rate charged by wholesale lenders with any markups charged by bankers or other lenders. These markups include any or all combinations of the borrower’s:
- Down payment
- Credit score
- Loan size
Data from these categories are used to determine the minimum interest rate a borrower will be assessed for a home mortgage.
Brokers and Lenders
Other markups to cover expenses and operating costs are also added to wholesale mortgage prices by bankers, mortgage brokers and lenders. Common markups include:
- Marketing costs
- Counseling and advising for borrowers
- Application processing fees
- Verification services
- Arranging for third party services (title insurance, mortgage insurance, flood and homeowner insurance, and closing services)
Can you get it for me wholesale?
Wholesale rates are not available to the public, even though brokers and lenders may advertise “wholesale mortgage rates.” However, learning about and knowing what the wholesale rates are, which can fluctuate daily, provides the borrowing public with a good deal of leverage when shopping for low interest rates on loans. It also provides protection as well.
Borrower Leverage
If you know what the wholes sale rate is at the time you begin negotiating for a loan, you can easily figure what the retail markup is – just subtract the wholesale from the retail and you have the information. Because mortgage bankers, brokers, and lenders compete for business, the retail markup is a negotiating point. If competition is strong enough, and you can generate competition by getting bids from several lenders, you stand a good chance of bargaining for an excellent rate.
Consumer Protection
Knowing the wholesale mortgage rate also provides protection for borrowers. Because the wholesale rate goes up and down, even on a daily basis, there may be a change in percentage from the day the rate is quoted to the day the contract is signed and the rate is locked in. If the wholesale price goes down, the rate will remain the same (it is doubtful it will go down for the borrower); if the wholesale price goes up, the retail price will rise. Knowing the wholesale rate can protect the borrower from being exploited because of a lack of information.
Finding Wholesale Rates
Here is the problem: Wholesale mortgage rates are not readily available to the public, and few, if any lenders will provide that information. Finding them takes a little work but it is doable. Several websites have sprung up and keep track of the numbers, it just takes a little bit of time to find them. Also, they may be highly technical in their explanation of wholesale mortgage rates and require some patience to decode the data.
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