Chase Relationship Pricing Offers Discounted Mortgage Rates Up to 1% Off Loaner

If you recall, Chase took over the struggling First Republic Bank in May 2023.

Before the fall of the First Republic, they were the leading giant real estate lender in the United States.

They were aimed at very wealthy homeowners and businessmen. And it was ironically their ultra-low rate mortgages that ultimately brought them down.

Today, Chase is the nation’s leading jumbo loan lender, with production of more than $8 billion in the first half of 2024, according to Inside Mortgage Finance.

Like the First Republic, they also court wealthy individuals by offering them special discounts on mortgage rates.

Up to 1% off mortgage rates if you take cash to the bank

In 2023, Chase was the third largest mortgage originator in the country, according to HMDA data. And the largest custodial issuer of home loans.

They were only beaten by two non-banks, United Wholesale Mortgage and Rocket Mortgage.

Their acquisition of the struggling First Republic only made them bigger and put even more emphasis on giant loans from the bank.

Essentially, they apply some of the same principles, but probably with additional safeguards to avoid the same fate.

One such practice is offering mortgage rate reductions to their wealthiest customers, those willing to park a lot of money in the bank.

The New York-based bank’s “Relationship Pricing Program” offers mortgage rate reductions ranging from 0.125% to 1%, based on the bank’s new and existing balances.

These apply whether you are buying a home or refinancing an existing mortgage.

As the chart shows, those who can scrape together $37,500 in new money or investments can receive a 0.125% rate reduction.

While it’s not much, customers who are able to bring in $300,000 in new money or investments can receive a total of 1.00% off their interest rate.

For example, if the mortgage rate offered was 6.5%, they might offer you a rate of 5.5%. And that could be hard for outside lenders to beat.

On a large loan amount, we are talking about significant savings.

Using a loan amount of $1,500,000, the difference would be approximately $965 per month. Or $11,580 per year.

They also offer a rate reduction of up to 0.25% for existing balances at the bank (0.125% for $500,000 to $999,000, 0.25% for $1 million and above).

How the Relationship Pricing Program Works

To receive the interest rate discount, the new money must be deposited into the customer’s Chase account at least 10 calendar days before the mortgage’s scheduled closing date.

Note that some accounts are not eligible, including business, deferred compensation, student, custodial, 529b college savings accounts, donor advised funds, certain retirement accounts, and unvested RSUs.

So make sure that the new funds will actually be taken into account in the reduction.

Customers will be subscribed via the actual rate of the tickets before the discount, by Inside Mortgage Financing.

In other words, it doesn’t look like you’ll qualify for the lower rate, assuming you need it.

And note that funds that settle into a customer’s deposit and/or investment accounts 14 calendar days or more before finalizing a mortgage application are not eligible for the new money reduction.

It is also possible to receive a post-closing rate reduction if funds are received and paid within 30 days of loan closing.

But it may be lower than the discounts available before closing, and the customer must sign a rate change amendment.

These customers will also not receive a refund of interest already paid before the rate change takes effect.

And while new and existing balance discounts can be combined, the total rate discount cannot exceed 1%.

Finally, for variable rate mortgages, the rate reduction will only apply during the initial rate period.

For example, the first five years on an ARM 5/6, or the first seven years on an ARM 7/6.

Good deal or not?

As with any of these types of offers, you need to compare what you might receive elsewhere.

I always look at the overall cost of the mortgage. This includes both closing costs and the interest rate received.

A discount means nothing if another bank or lender can offer a lower mortgage rate with fewer closing costs.

For example, 1% off a 7% rate equals 6%. If another lender can give me 5.875%, who cares if it’s 1% off?

And how much do I have to pay to get this interest rate? Points, setup fees, etc.?

So take the time to compare offers and also think about how much your money should earn once parked in a Chase account.

There is also an opportunity cost to consider here, which can muddy the comparison when expected returns are not guaranteed.

But if Chase blows out the competition, then that could be a no-brainer and another reason to use them over another mortgage company.