Mortgage Blog

All rates are almost at history low except 30 yr fixed programs.

Read an artcle on the mortgage magazine over the weekend,
it said that the average profit per loan in the first quarter
of 2009 was $1088, up from $148 the quarter before.

That means that the lenders' operation cost is very low now
and their profit margin is very high. And they can lower the
rate(thus the profit margin) if they want to.

That's related to the strategy changes from the lenders we saw
this spring. The lenders have the pricing/rate difference
for the loan programs(for example 15 day lock rate is 0.125%
better than 30 day lock). So the LOs(the loan originators)
will float the loans first, and lock the rate later for a short
period when the loan was fully approved.

The lenders benefited from this strategy because their pull-through
ratio is much higher than before(they will pay to the investor
of around $700 to $1000 for each loans locked but not delivered).
Loan brokers have to follow this strategy to survive.

For the current rate, I think the 15 yr fixed rate should be bottomed
out. 30 yr fixed rate still have the room for lower rates. ARM rate
may have room for lower if the lenders want to.

10yr fixed and 20 yr fixed rates are very good for 250k loans.
Take advantage of this program if you are interested.