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UWM exclusivity deal linked to 5 bps mortgage price drop at rivals
An academic analysis using HMDA data from 2018 to 2022 found the price decline was driven more by lower interest rates than fees for loans from non-excluded competitors.
United Wholesale Mortgage’s 2021 move to bar its broker partners from sending loans to Rocket Mortgage and Fairway was associated with an average 5 basis point price drop at rivals that were not targeted by the policy, according to an academic paper cited by HousingWire.
The study, conducted by Spencer Stone of the University of Kentucky, analyzed Home Mortgage Disclosure Act data merged with Fannie Mae and Freddie Mac single-family loan performance records, covering more than 400,000 loans and a period that includes 2018 to 2022.
Stone compared within-lender wholesale versus retail price changes for identical borrowers in the four months before and after May 2021, when the policy first showed up in origination data. The paper found that prices on loans originated by non-excluded rivals decreased by 5 bps on average after the exclusivity provision, and that the effect stemmed more from reductions in interest rates than fees.
The paper also argues that because exclusivity arrangements are rarely complete, they can create spillover effects when demand shifts to non-excluded competitors, while pricing frictions limit precise targeting of displaced borrowers. HousingWire reports the study period included UWM’s 41.74% share of the wholesale channel, with Rocket Mortgage dominating the retail channel and holding a rising wholesale share before early 2021.