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Everyone knows our economy right now is unstable. The big question on everybody's mind is can mortgage rates get any lower? My answer is no. I don't see how interest rates can get any lower because of the simple fact that banks are not making money right now and they have not been making money for the last couple of years. Let's say for a moment that mortgage-backed securities get a huge pool of capital over the next couple of months. That will drive yields up and mortgage rates down right? Wrong! The banks that offer mortgage loans know they have to earn some kind of a premium on the origination of that loan, even if it is small.
This means bank will put a "floor" on how low mortgage rates will actually be. Put another way, we might have bonds that generate 3.0%, 30 year fixed-rate mortgages, but banks will put floors on those mortgages of say 4% and they'll add discount points to it. So in essence they are protecting themselves so they can still earn a very thin premium. So if you are waiting for mortgage rates to get lower before buying a house or refinancing the house who already live in, you are going to be waiting a very long time.
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Do you really believe that or are you trying to create urgency that doesn't exist?
I don't know that the spread makes the interest rate a full .25% worse than it used to be but the price definitely is. Fannie/Freddie added an "Adverse Market Delivery" fee of 0.25% after the meltdown of 2008 (I think they added it in 2009) but the effect on the actual interest rate is from 0 - 0.125% at the most. GregP.S. Some of the big banks' spread is higher by at least .25%, often times more, on the rate. But those are only the really BIG retail lenders and it is really nothing new. The easy way to avoid it is to avoid any bank that also accepts deposits when looking for who to use for your mortgage.
Once, not so long ago, many said "wow, rates are at 5%, they will never go any lower..."
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