The mortgage and real estate marriage trend continues, this time with Realogy and Guaranteed Rate joining forces to create a new venture known as “Guaranteed Rate Affinity.”
This new partnership will result in a massive mortgage origination platform that pairs the nation’s eighth largest retail mortgage lender with the world’s largest franchisor of real estate brokerages.
Under the agreement, Guaranteed Rate will provide its mortgage lending services to Realogy’s real estate brokerage company NRT, and to its relocation subsidiary Cartus.
Some of Realogy’s NRT real estate brands include Climb Real Estate, Coldwell Banker, Corcoran Group Real Estate, Sotheby’s International Realty, and ZipRealty.
Guaranteed Rate Replacing PHH as Lender of Choice
- The 8th largest retail mortgage lender in the U.S.
- Will provide home loan services to Realogy customers
- Which includes brands like Coldwell Banker, Sotheby’s, and ZipRealty
- Follows the recent trend of mortgage and real estate companies linking up
Part of the undertaking will involve the acquisition of four regional mortgage origination and processing centers previously belonging to PHH Home Loans, along with its relocation division and some of its employees.
PHH used to provide these services to Realogy but has been reducing its mortgage footprint of late.
The move should allow Guaranteed Rate to get its hands on a lot more purchase mortgage business, a trend that has grown in popularity as mortgage refinance activity continues to wane.
Perhaps home buyers can take advantage of their “Double Match” loan program that only requires a 1% down payment.
It’s no secret that refis aren’t as hot as they once were, this despite the 30-year fixed still averaging just over 4%. But many homeowners already took advantage when rates were in the 3% range, lessening the incentive to do so anytime soon.
Refis Are at Their Lowest Level Since 2009
- As the refinance pool continues to dry up thanks to higher interest rates
- Mortgage lenders are working to position themselves in the purchase market
- This means partnering with a large real estate company
- To ensure they get a larger slice of the home purchase mortgages being originated
The Mortgage Bankers Association reported this week that the refinance share of total mortgage activity fell to 46.9%, the lowest level since June 2009.
This is happening even as purchase activity barely ticks higher…
The hope is that Guaranteed Rate can turn its focus from refis to purchases by marketing its lending services to the roughly 800 offices and 47,500 independent sales associates that make up Realogy’s NRT.
NRT did approximately $167 billion in total residential real estate volume in 2015 and has been ranked number one nationally in existing home sales volume for the past 19 years.
If Guaranteed Rate can get even a small slice of that action they’ll be in pretty good shape, even if the refinance business completely tanks.
They aren’t the first ones to get this idea though. Back in October, Motto Mortgage was created by RE/MAX Holdings to offer the first-ever franchised mortgage brokerage that pairs real estate agents with mortgage brokers.
It’s unique in that it allows real estate agents to choose a broker who can shop the buyer’s loan with a variety of companies, not just the one a captive bank employee could offer.
Then we got a big surprise late last month when Redfin Mortgage unveiled itself. They too seem to want to get in on the real estate and mortgage trend. After all, why wouldn’t you want a one-stop shop for all your real estate and financing needs?
For the record, real estate agents apparently influence lender choice in nearly half of home purchases. In other words, they’ve got a lot of power and mortgage lenders want to make sure they’re the first ones they call.