Mortgage Rate Arbitrage!

Written by Posted On Monday, 03 October 2022 00:00

This strategy will only work for those markets with homes with prices in the seven figures or so. I know this excludes most of the business we all tend to see, but it is part of establishing yourself as a local professional with market awareness. 

Remember how just about every originator in the country was posting about how their new conforming loan limit was now going to $715,000? I sure do. In fact, it was the exact type of email and social media post I tell my clients NOT to be posting on social media or email blasting because it can make you look like every other originator in the country, if not downright stupid!

What do I mean by this? Simply put, when everybody is posting something that they are representing as “special”, and people see dozens of other posts referring to the same thing, they realize there is nothing special about whatever it is you are posting, and they tend to ignore you. Think Chicken Little! At first, they notice, then they ignore you. You never want people to ignore you!

Now to my bigger point, the higher conforming loan limit is costing your clients money! Yes, the new higher limit doesn’t really benefit your customer. Why? Because the rate on Jumbo loans right now is significantly lower than on conforming loan limits.

Let’s do a little mortgage rate arbitrage. You can plug in your own rates off your own rate sheet and I am aware that all prices may vary from investor to investor, but I just went to the internet to a generic calculator and allowed it to select the “average rate for that specific loan amount. What I found was very interesting. The monthly P&I payment on a $700,000 loan @ 7.5% on a 30-year fixed was $4,895. The payment on a $815,000 jumbo loan @ 5.9% was $4,834 for the same 30-year fixed rate loan. That is like getting $115,000 for $61 a month LESS.

Imagine the conversations you could have with accounts and financial planners, or even those agents working the higher end properties in your market? What if you ran your own numbers to see what you could deliver and the conversations you could be having? Might just be a point of differentiation that sets you above the others!

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Michael White

After 18 years working in all phases of mortgage originations, Mike left day to day originations to start his consulting and coaching company. Now, more than 18+ years later, Mike is working with clients across the country in all markets, big and small, that have generated more than three billion dollars in loan originations within a year.

Mike teaches a system that is focused on time management, action planning, marketing a message, and creating value for both clients and referral sources alike. Quite simply, providing more value leads to more opportunities, more income, less time, and a systematic approach that begs to be duplicated.


By breaking down individual aspects of the mortgage business and providing a step by step approach to creating a consistent flow of opportunities that can lead to a highly successful mortgage practice. That is why people who incorporate these strategies out produce the national averages by almost 3 to 1!

Fundamentals and simple strategies provide day to day activities that help provide a “scheduled success” philosophy. It’s all about identifying, targeting, and establishing profitable referral relationships using exceptional value to keep you in the center of your own referral triangle.

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