I know everyone makes a big deal out of interest rates being so low.
I say, why are they so high? I think they could easily be up to two points lower than where they are. You heard me right. At least two points lower.
So mortgages fetching about 6.75 percent "now," could easily be 4.75 percent, maybe even 4.5 percent for a 30-year loan.
But they're not. Why not?
Because what banks charge you for money is way out of whack with what they themselves are paying for that money.
Keep this figure in mind: 2 percent. 2.0 percent. That's what banks are paying for overnight money from the Federal Reserve. Yet on their loans — mortgages being the cheapest among them — they're charging more than three times that!
That's not a spread, my friends, that's a sin!
I can see locking in a profit. But gouging for one is another thing entirely. A pad for uncertain times, I can see. Buttressing yourself against applicants who might not pay, I can see. Maybe allow two extra points of cushion room — the historical norm — I can see. OK, I'll give you three — if you're really greedy — that I can stick my nose in the air and say, OK, I can "kinda" see.
But four, four and a half, five points, as some lenders are doing? I don't think so.
The sad fact is many of us are just shocked to see rates as low as they are. I'm here to tell you the focus shouldn't be on us saying thank you. It should be on the banks themselves, who are all but saying screw you.
Now, who's exactly zooming whom?
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