As purchase demand for existing homes stagnates, home builders and mortgage lenders continue to lean on forward commitments where they can offer mortgage financing well below market rates.
But with average rates on typical 30-year home loans sitting above year-ago levels, builder-subsidized rates on new construction are also skewing mortgage rate indexes that borrowers see quoted in the market.
Paul Yarbrough, director of data analytics for Mortgage Capital Trading, a secondary markets and hedging advisory firm, has seen the growth in builder-lender partnerships over the past few years as borrowing costs have risen and production pipelines have thinned.
“We have a few dozen clients that participate in these builder-forward programs that ar...