A leading national wholesale lender has rolled out a loan program that offers borrowers mortgage rates as low as 1.99% for both purchases and refinances.

However, this rate isn’t for every borrower, or even the majority. Though the rate is legitimate, this is not a no-cost loan. When borrowers go to take out a mortgage, they pay for their rate.

While a rate of 1.99% could cost a borrower thousands of dollars more on their loan, if they are planning on staying in their home for several years, the lower rate could make sense over time.

The 1.99% rate is almost a full percentage point below the 2.88% average U.S. mortgage rate for last week, as measured by Freddie Mac, the lowest in a data series that goes back almost five decades.

Mortgage rates have tumbled since March when the Federal Reserve began buying bonds to support the economy during the COVID-19 pandemic. The Freddie Mac average rate, the oldest measurement of mortgage data, has hit record lows eight times this year.

The Fed started buying Treasuries and mortgage-backed securities to grease the wheels of the credit markets and avoid a repeat of the credit crunch seen during the 2008 financial crisis.

Low mortgage rates like these have spurred demand for real estate and supported home prices during the recession caused by the COVID-19 pandemic.

U.S. existing-home sales rose 21% in June, the biggest monthly gain on record, and the median price rose 3.5% from a year ago, the National Association of Realtors said in a July 22 report.

While many borrowers may not benefit from the 1.99% rate, dropping rates this low may also lower other mortgage rates into the 2s for a variety of borrower types.

Even lower rates are possible on 15-year mortgages, going down to 1.875%. Cash-out and high-balance loans are not eligible and the product is only for owner-occupied properties.

The initiative is designed to help increase purchase and refinance mortgages for the broker community.

The rate is only available through independent mortgage brokers, the company said in a statement.

* Some loans may take longer to close. Restrictions apply. The 1.99% rate is as of 8/24/20, for well-qualified borrowers in Los Angeles county, loan amount under $765,600, loan-to-value (LTV) up to 60%. The principle and interest payment (PI) on a $250,000 at 60% LTV on a 30-year Fixed Rate loan at 1.99% (APR 2.34%) is $922.80, estimated financial charges: $12,200; and on a 15 year Fixed Rate loan at 1.875% (APR 2.49%) is $l,594.42, estimated financial charges: $11,250. PI payment does not include taxes and home insurance premiums, which will result in a higher actual monthly payment. Rates are subject to change.