Although the economy could be softening further and the Federal Reserve could lower rates again, it might not translate to lower rates for the mortgage industry. This is a national issue and so it does not matter if you are seeking Oregon Home Loans or California Home Loan Mortgage Rates.
I say this because the 10 year bond, which is supposed to determine mortgage rates, has recently, at times decreased, and yet mortgage interest rates have not decreased in tandem.
This disconnect between the bond and mortgage rates is happening, I believe, because the main lenders are gaming the market. They are more interested in taking larger profits, by widening the spread between the 10 year bond rate and mortgage rates, than passing that lower rate onto the consumer.
The reason they are doing this is to help offset the losses they are taking in the subprime arena. Put another way, a little more profit in prime loans is helping offset their losses in subprime loans.
Rates should be lower considering today's bond rate, however, judging by recent events that might not happen while lenders are more interesting in gaming the market.
Comments