What is really a fair mortgage rate?

Discussion in 'Economics' started by peilthetraveler, Apr 17, 2010.

  1. Buzzed

    Buzzed

    Savings rate is 5%. The bank is borrowing that money at that rate. To make money, the bank needs to lend that money out at a higher rate than 5% right off the bat. You cannot lend at half the rate you are borrowing that money with.

    You are right though, it doesn't need to be double the rate. At the time it made sense to me for some reason.
     
    #31     Apr 18, 2010
  2. S2007S

    S2007S

    Until the intervention within the market place dissipates, mortgage rates will stay artificially low for years, any uptick in rates above the 10 year trend line that is around 6% would push buyers out of the market in these economic conditions, I believe 6.5%-7% would really keep housing from moving anywhere, that is why they bought MBS and artificially created low rates to spur demand in housing.
     
    #32     Apr 18, 2010