Big Banks profiting from huge spread on Mortgage rates
Consumers, This why you should consider a mortgage through a local mortgage bank or Credit Union rather than one of the big banks:
"In September 2011, banks were making mortgages with an interest rate of 4.1 percent. They were then selling those mortgages into the market in bonds that were trading with an interest rate, or yield, of 3.36 percent, according to a Bloomberg index…That 0.74 percentage point 'spread' was close to the 0.77 percentage point average since the end of 2007. Banks were taking roughly the same cut on the sales as they were in previous years. But something strange has happened over the last 12 months. That spread has widened significantly, and is now more than 1.4 percentage points. The cause: bond yields have fallen a lot more than the mortgage rates that banks are charging borrowers."