Orlando Mortgage Blog

Why haven't lenders lowered Mortgage rates?

October 29th, 2008 12:51 PM by BILL WILBANKS


Short answer, they don't want to yet...and won't until they have a market to sell them through to profitably, are able to sell the securities to willing investors who are no longer afraid of early payoffs or loan loss issues or declining real estate values show signs of bottoming at some point. Why should they with the Fed programs available to them right now put in place to increase liquidity in the financial system and in theory eventually to free up lending to the consumer ($700 Billion dollar trickle down theory without requirements to lend, where's my piece?). 

For the time being the big guys have a bunch of our found future tax money and are buying the little fish with it. They're getting bigger with our tax dollars and full Fed support apparently. The yield curve could be getting more attractive depending on the FOMC cuts now or in the future for the lenders to branch out and actually make loans at rates meant to attract consumers. Long rates are normally influenced (in a normal market...remember those) by supply and demand. But if there is no one buying mortgages or the 7 year prepayment assumption, that 30 year buyers normally rationalize, no longer applies due to early payoffs expected in a declining rate market...

BILL WILBANKS  www.orlandomortgagemasters.com       

Posted in:General
Posted by BILL WILBANKS on October 29th, 2008 12:51 PM


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