Eleanor Lockwood of Alabama: Record Low Mortgage Interest Rates Could Be Lower

NEW YORK, NY, August 29, 2012 (Press-News.org) The New York Times reports that both mortgage and refinancing rates are historically low. In fact, it asserts that these low rates are "giving borrowers plenty to celebrate." But the reality is that the banks that are making the loans are the "bigger winners." Eleanor Lockwood of Alabama explains how the banks are profiting from these record low mortgage rates.

According to the article, analysts have reported that the banks are taking in profits at a higher rate than average: "That 3.55 percent rate for a 30-year mortgage could be closer to 3.05 percent if banks were satisfied with the profit margins of just a few years ago. The lower rate would save a borrower about $30,000 in interest payments over the life of a $300,000 mortgage."

Guy D. Cecala, the publisher of Inside Mortgage Finance, asserts that banks are offering lower interest rates and, essentially, saying "you should be as happy as a clam." However, the truth is that borrowers could have access to lower interest rates. On the other end of the spectrum, Jay Brinkmann, Chief Economist of the Mortgage Bankers Association, asserts that, while gains are higher, so too are originating costs.

Additionally, notes the article, the extra revenue that banks are making, so to speak, comes from their "middlemen" function. Banks bundle mortgages into bonds, which they sell to investors. By achieving higher interest rates on mortgages and lower interest rates on bonds, banks can create a larger revenue stream.

Despite how banks are making more money on their mortgage loans, some people believe that the potential savings of lower interest rates should be passed on to consumers. But banks are not likely to lower interest rates on their own--especially when the rates they are offering are considered to be, already, historically low.

Eleanor Lockwood of Alabama, asserts that consideration might be given to once again utilizing state bond loans in an effort to lower rates in competition with large banks. This would, by virtue of the nature of competition within the capitalist economic model, encourage these banks to narrow their margins by lowering their rates. The idea here is that they would have to offer more competitive rates in order to keep their clients--and attract new ones.

Lockwood is looking forward to seeing how the mortgage industry continues to develop and how consumers will take advantage of the rates that are now available to them.

ABOUT:

Eleanor Lockwood of Alabama is an experienced mortgage industry professional. For over 40 years, Eleanor Lockwood has served the residents of Alabama through her expertise regarding the financial and mortgage sectors. Today, Eleanor Lockwood of Alabama utilizes her insight to audit files and assist in legal issues that are pending or approaching. She also benefits her community through volunteer activities, including the coordination of fundraisers for important causes.

Website: http://eleanorlockwoodalabama.com