Guild Offers New Rate Buydown Program

Guild Mortgage is rolling out a new rate buydown program, the company announced in a press release.

The program, Payment Advantage, applies to any borrower locking in a conventional mortgage. Guild will then pay 1% of the borrower’s interest rate for one year.

The borrower’s monthly payment will increase after that period, but they may then be eligible to refinance.

The program is available until March 31, 2023.

“Freddie Mac reported that the average commitment interest rate for a 30-year, conventional, fixed-rate mortgage was 6.90% in October, more than double the rate of 2.96% across all of 2021,” said Guild CEO Mary Ann McGarry.

“With the rising costs of loans in today’s increasingly competitive housing market, we want to continue to find creative ways to help prospective buyers achieve homeownership and start building family wealth. Introducing Guild’s Payment Advantage will help our clients save on their loan payments now, as well as offer the ability to refinance without lender fees through December 2025 with our Payment Protection program.”

Guild joins other lenders who are trying to entice buyers back to the market with temporary buydowns.

Major industry players like Rocket Mortgage, Guaranteed Rate, and UWM have introduced their own programs this year.

“Temporary rate buydowns have been around for a long time, but they’re really only relevant in a market like this, where rates are flying off the handle,” says Dan Catinella, chief lending officer at Total Expert, told Bankrate.

Interest rates have fallen in recent weeks, but are still double what they were at the same time last year.

High rates lower a buyer’s chances of affording a monthly payment. Many Americans who could have bought a home when rates were low have been priced out of the market.

Ed Pinto, director of the AEI Housing Center at the American Enterprise Institute, notes that lenders, real estate agents, and home sellers have benefited from rising rates, while others have been sidelined.

“Left out as beneficiaries are first-time buyers,” he told Fortune. “Rather than being a boon, housing is getting further out of reach as entry-level home prices soar.”

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