Federal mortgage bond purchases are helping lenders more than homeowners in need of refinancing, Bloomberg News reported.
The Federal Reserve announced it would purchase $40 billion more securities each month earlier this month, but so far it is lenders reaping the benefit. The gap between the rate for a new, 30-year mortgage and the yield on the bonds into which such loans are repackaged and re-sold has widened to a record level of 1.7 percent, Bloomberg noted — which generally indicates rising profits for lenders.
Federal Reserve Chairman Ben Bernanke’s bond purchases were aimed to boost the housing market, but lenders have had trouble keeping up with the high consumer demand to refinance mortages, which is keeping rates — and presumably profits — higher.
“It’s very good to be a mortgage originator right now,” Kevin Barker, an analyst at Washington-based Compass Point Research & Trading, told Bloomberg. [Bloomberg] — Jane C. Timm