Rate Table Roulette

Barrier to entry is steep in this direct-to-consumer advertorial method

Sarah Wolak
Sarah Wolak
Rate Table Roulette

Real-time, Real Cost

Both Harris and Stein say that even though rates are displayed in real time, there are risks to the game. “Quality control and policing the marketplace are really up to the rate table company,” Stein said. “The only room for fallacy is if the lenders are actually adhering to the rates that they offer, or not. That’s why sometimes companies are tested on whether or not they can prove their rates.” Stein added that rate tables are “driven by a pricing agent and the software can see the price origins from whichever investors are providing them.”

Harris says that for LenderCity, quality control is done by tech but always has a set of human eyes on it, too. He says that LenderCity runs various scenarios to make sure everything is accurate with a lender’s rate information. “Rate tables should be relatively seamless,” Harris said. “Aside from accuracy, It comes down to how competitive you are as a lender. The more competitive and lower the margin, the lower your rate and the higher your chance of landing business.”


Adam Stein

Consumer Attitudes

Like the market is cyclical, rate tables are too, which goes hand-in-hand with how consumers are approaching rate shopping. Stein says consumer appetite now just isn’t where it should be, and for that reason, lead generation via rate tables is on the slower side. “For example, looking at one lender’s offering on Bankrate, there’s one lender on here offering 5.6% or 5.7% with discount points of 2 points,” Stein said. “How many consumers really want to pay a 2-point discount? Probably not many.”

Stein pointed out that it’s difficult for lenders to get any positive returns on their investments in this market. “Last year when rates turned, it took 117 days from the time a person hit a rate table until they closed,” he said. “That’s four months before any return on the investment. And there was a ton of breakage in those that would go through because of interest rate complications.”

Stein says that it’s hard now to drive quality traffic or even gauge a consumer’s intent since customers are largely disinterested in the market. “I typically judge rate tables on the quality of the traffic and leads. But right now, lenders need to be careful where they’re acquiring [their traffic and audiences] from,” Stein warned. “It’s slim pickings for customers.”

Harris says that since LenderCity’s official launch date was June 1, he hasn’t seen the impacts of higher rates on his lenders yet since the table is in its infancy.


Gregg Harris

Competition to Boot

For Patrick Nolan, rate tables are also used as leverage during lower volume times. Nolan, who is a mortgage loan originator for FSB Mortgage, says that rate tables such as Zillow are a more often a source of information for a consumer to put in an exact loan scenario. “By the nature of the market, [rate tables are] slim profit-margin deals at the most aggressive rates,” he explained. “People who use rate tables are most likely not first-time homebuyers, they don’t need their hand held and they’re willing to explore and make decisions themselves. The buyer who shops and compares gets a better deal.”

Stein says that the competition is even tighter for lenders. “Other lenders competing against each other are probably tattling each other on competitive margins,” he said. “I’ve also seen a pattern of practice of lenders ratting out each other by saying another lender doesn’t offer those rates.”


Patrick Nolan

And some lenders don’t need to compete. Nolan says that household names like Rocket are less likely to appear on rate tables since they don’t want to lose money on offering consumers lower rates. Nolan says it’s the mid-sized lenders – who aren’t household names – that use rate tables to come off as honest and trustworthy. “Up to 75% of consumers buying a house usually take the first mortgage offer without shopping. But if that same consumer were buying a car, they’d probably shop it to death to save even $500,” Nolan said. “The mortgage industry is well aware of that and they take advantage of people not shopping by presenting them with high rates.”

Sarah Wolak
Sarah Wolak,
Staff Writer
This article was originally published in the Mortgage Banker Magazine September 2023 issue.
Published on
Sep 07, 2023
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