RealTime IT News

E*Trade Intros Portable Mortgage

Seeking to capitalize on today's record low interest rates to build its business, E*Trade Group Monday introduced a new product that may make the housing finance industry sit up and take notice.

The company's E*Trade Mortgage subsidiary launched a portable 30-year fixed-rate mortgage which will allow borrowers to lock in a mortgage rate and then transfer it to the next home they purchase.

Dubbed "Mortgage on the Move," E*Trade said the program will potentially save home buyers thousands of dollars in interest by allowing them to transfer the terms of their current loan to a new residence rather than paying off the existing loan and applying for a new loan at potentially higher market interest rates.

While the product may lose its appeal when interest rates begin to climb, E*Trade said it will be available for a limited time.

"E*TRADE Financial expects this program to drive overall purchase money product volume for E*Trade Mortgage," said Arlen Gelbard, chief banking officer and president of E*Trade Bank. "We are excited to be launching another product that aligns with our mission to take advantage of market conditions and pass increased value on to consumers."

Robert Bernabe, head of Retail Mortgage Lending at E*Trade Financial, added, "industry experts predict that mortgage interest rates will rise significantly in the next several years. This is the first time this concept will be widely available in the United States, giving consumers the ability to extend the benefit of today's record-low interest rates."

E*Trade, which originally launched in the late 1990s as an online broker, has been working to diversify its financial services offerings. It jump-started its online loan origination business in January 2001 with the acquisiti on of LoansDirect, and launched E*Trade Mortgage that June. It boasted 40,000 customers last year.

In April, the company reported that for the first quarter of 2003 its mortgage business generated more than $2.5 billion in direct retail mortgage originations, with another $1.2 billion in the pipeline at the end of the quarter. It also reported growth in the correspondent side of its mortgage business which produced more than $1.2 billion.