A fading middle-class perk: lower mortgage rates

[Omaha Steve]

http://apnews.excite.com/article/20140425/DADD8FOO1.html

By JOSH BOAK

WASHINGTON (AP) - For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates.

Now, even that perk is fading away.

Most ordinary homebuyers are paying the same or higher rates than the fortunate few who can afford much more.


In this April 16, 2014 photo, the Jaswal family, Imran, standing, his wife Aniqa, left, and daughters, Arissa, right, and Jayda, pose for photos in the family room at their home in La Jolla, Calif. The couple bought the four-bedroom house about 10 minutes from the beach in Febrauary. Once Imran’s management consulting business began flourishing, the couple felt comfortable enough after years of renting to buy their first home. (AP Photo/Lenny Ignelzi)


Rates for a conventional 30-year fixed mortgage are averaging 4.48 percent, according to Bankrate. For "jumbo" mortgages - those above $417,000 in much of the country - the average is 4.47 percent.

FULL story at link.

[yeoman6987]

1. .01?

It could have to do with credit scores. Middle Class do not have squeaky clean credit scores like the ultra rich. At the bank when you put 25K or more into a CD or even money market, you may have a higher interest rate than the middle class who has a lower amount of money in the account. Sometimes that interest rate could be a point or more difference.

[Travis_0004]

2. I think it has a lot to do with the costs with a loan

If you are a bank, offering one loan for 1 million dollars is a lot easier than trying to get 5 loans for 200,000 each.

There are a lot of money that is spent just trying to get a loan. I'm applying for a mortgage now, and I have had 3 banks overnight me documents, I signed them, and overnighted them back. All at their expense. I only need 1 loan, so 2 banks will have spent that money, plus an hour or more of time for a loan they will never close on, so I can understand why a bank would rather make a few small loans than a lot of large loans.