Mortgage Buying Groups: do they exist?

Question

Hi all,

This is a bit unorthodox but curious to hear some thoughts. I reached out to a dozen lenders in Boston to find the best rate for my own mortgage. Many of my friends were looking for mortgages at the same time. So, we asked a few of the lenders if they'd give us a discount if we got 10-20 borrowers to go with the same bank. Surprisingly, 2 of them said yes and now we're bargaining on price.

This didn't seem all that difficult to do, so I'm wondering if this already occurs at a larger scale? Are there any buying groups I could perhaps join to find an even lower rate?

Chris Abkarians · Answer

Thanks Chris, having a more in depth discussion with someone fairly senior tomorrow and will let you know what comes of it.

Current discussion is around structuring a 25-50 bp discount to borrowers without changing closing cost (which was already quoted at zero). It was already also the best rate I'd found! Closing timeline is an open ended discussion point right now. There is some openness to executing this as long as the borrowers apply and are approved by a certain date.

Lien Vuong · Answer

This exists on the debt side with existing loans (student debt specifically) but for purchases there's quite a bit of moving targets because everyone's timelines are different. This might make more sense in the refinance scenario once you've purchased and are looking for a better collective rate.

Sanat Bhandari · Answer

@Chris Abkarians What you're describing is exactly how mortgage brokers operate

Wholesale lenders (in your example, the banks that you negotiated with in this case) would provide you wholesale loan pricing for sending them more business

Brokers have access to lending networks and sell wholesale loans at a retail markup to consumers

Consider becoming a mortgage broker if you want to find a lower rate and niche products that local banks may not offer

Chris Davidson · Answer

@Chris Abkarians interesting concept. Did they mention any details on loan amounts/ discounts given or closing time lines.

It is one thing to say yes we can give a discount and they drop the rate and increase closing cost. Way to surround yourself with a solid network!