Rocket Pro TPO becomes the first to raise conforming limits in 2022

The "loan limits wars" are starting nearly a month earlier this year, as Rocket Pro TPO has raised its conforming threshold to $715,000 from the current $647,200.

Last year, the first shots were fired by Rocket's rival United Wholesale Mortgage and PennyMac, when on Sept. 30, well in advance of the Federal Housing Finance Agency November announcement, they raised the upper end of their conforming loan purchases to $625,000 from the 2020 limit of $548,240. Among the others that followed were Rocket, Finance of America, Homepoint and CMG. Changes in the conforming loan limits are set on a formula based on home price movements and these lenders acted in anticipation of the FHFA's action.

Rocket TPO's higher limits are live now.

"We want to give our partners and their borrowers a competitive advantage," said Austin Niemiec, executive vice president of Rocket Pro TPO. "Speed of the game has never been more important and we have our partners' backs."

Typically at nonbank lenders, conforming mortgages have lower interest rates and better pricing than jumbo loans.

"It's less money down on purchases, it's more cash-out on a refi," Niemiec said. "And it's typically an easier process and easier documentation compared to a jumbo."

Rocket Cos. has the capacity to hold these loans until they can be delivered to the government-sponsored enterprises at the start of 2023. The company is also offering the higher limits in its direct-to-consumer channel, a spokesman added.

The change comes in the midst of a pricing war, led by UWM, which offered mortgage brokers a 50 to 100 basis point discount.

Rocket Pro TPO has been one of the more consistent wholesalers in the market as well as a price leader, Niemiec said.

"There are some competitors out here that will run flash sales to get some marketing, then they're in and out of the market," Niemiec said. "What we've found is brokers like consistency. They like reliability. They don't like gimmicks."

In addition to the change in conforming limits, higher property values allowed Rocket Pro TPO to introduce a closed-end home equity loan later this month.

Unlike other products, it is fixed-rate, with terms including loan to values up to 90% plus 10-year and 20-year financing.

While home equity has reached record high levels, so is debt, especially from credit card borrowings, which also comes along with high interest rates.

"It's never been more important, we believe, for lending partners to be on the offense to innovate or roll out new products to put our brokers in a position to win and diversify," Niemiec said. "And that's what you're seeing us do at a very rapid level."

Rocket Pro TPO is planning several additional product introductions over the next 30 days, at a time when others like loanDepot and Mountain West Financial, are exiting the wholesale channel.

"While a lot of lenders are kind of shying away from the wholesale space, we're really leaning in and investing in it right now," Niemiec said.