Mortgage Blog

Actually this is from an article on wsj.com.
I don't know why wall street just figured this
out. This is not a secret from the mortgage
industry:

1)From the current MBS, the mortgage rate should
be around 2.875% for 30 yr fixed(by paying closing
cost). But the borrowers could not get this rate
since the anks hold all the profits. Usually the spread
is about 0.5%, now it's between 1.3 and 1.6 points.

2)Banks does not hire new employee. They only
hire temp works since they know that the business
will be "dried up" if the rate goes up. That's why the
turn around time is very long from some lenders(
I have one loan not reviewed after sending to them
for about a month).

3)New regulation makes it hard for the loan underwriing.
The overhead cost is higher. Usually one underwriter
can review 190 loans, and now they can only review
60 loans. The rate is higher when they have higher
overhead cost.

4)You will know from the following example:
"If you open up a restaurant that seats 100 people,
and you have 100 people out the door, your first
thought is not to drop your prices,". Same for the lenders,
they do not have any intension to drop the rate yet.