So what's up with Rocket Mortgage's "Inflation Buster" deal for homebuyers? Let's break it down.


Essentially, they're offering a consumer one interest rate - call it 7% - but for the first year, Rocket is paying the difference to make that borrower's mortgage 6%. So it's a temporary buydown.

I wanted to bust out the old HP 12C and do some math... 

So basically, they're taking a $300,0000 loan at the market rate of 7%, with a monthly payment of $1,995. 

But the mortgage payment at 6% is $1,798. 

So that is a difference of $196 a month or $2,356 a year. 

They're taking that $2,356, putting it into an Escrow account, and disbursing it in equal increments each month for that first year. 

Now, if you take that $2,356 and divide it into that $300,000 loan, it's 79 bps.

So they're giving that borrower a Lender Credit of 79 bps (which any lender could do).

If you've seen anything on Rocket's numbers after their Q2 release, their gain on sale is like 85 bps higher than the industry average - so they definitely have a little bit of margin to give. 

Instead of calling it a Lender Credit, they're packaging it up as this cute "Inflation Buster" deal. They're going right to the consumer because consumers know that interest rates are up. Rocket makes it seem like they're offering something special - something a little bit different. 

This is a timely campaign for them. We'll see how it plays out.

Basically, a three-quarter point Lender Credit, no big deal.