The top four banks JP Morgan, Bank of America, Citigroup and Wells Fargo have plenty of money to lend, They are all advertising new record-low mortgage rates. At first glance, one would think those very attractive rates would spur on both home buying and refinancings.
The problem is consumers often find (once in the door) they can't access those rates and are instead either pushed to higher rates or told they do not qualify altogether. Two of every three mortgage refinancings over the last three years have gone to higher income households with the bulk of refinancings going to higher coupon loans.
How is it that the banks can now disqualify Americans from refinancing at lower rates and lower payments when they are currently performing on loans at higher rates and higher payments?
Even more appalling, mortgage rates should actually be lower than advertised. The spreads between the average national rate on the 30-year fixed mortgage and the 10-year treasury rate seen over the past 10 years has been 153 basis points. On Friday 10/14, the 10-year treasury rate was at 2.26%, while the average national mortgage rate advertised by the banks was at 4.17%, a shocking 191 basis point spread.
The average rate presented to consumers should now be more around 3.79%.
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