Don’t Bank on Getting The Lowest Mortgage Rate

by UrbanTurf Staff

Don't Bank on Getting The Lowest Mortgage Rate: Figure 1

In these times of historically low mortgage rates, it is not uncommon to see advertisements for rates below 4 percent. However, actually getting that low rate is easier said than done.

The Wall Street Journal reports today that the “gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years,” with advertised rates as low as 3.75 percent versus average rates of 4.39 percent. The number of borrowers who end up getting the 3.75 percent mortgage is quite low, and it is not because of issues like poor credit scores.

From the WSJ:

It is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informa Research Services, by offering borrowers slightly higher rates. Lenders say they haven’t lowered rates further because, simply, they don’t have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost.

The idea that advertised rates are frequently too good to be true is nothing new, but if indeed there are 3.75 percent 30-year loans out there, who is getting them? Those with perfect credit history who are willing to pay points?

See other articles related to: the wall street journal, mortgage rates

This article originally published at http://dc.urbanturf.com/articles/blog/dont_bank_on_getting_the_lowest_mortgage_rate/4093


  1. Bryan said at 4:55 am on Wednesday September 7, 2011:
    This article fell disappointingly flat. You lead with the possibility of some investigative insights and then just peter out on a rhetorical. We know people aren't getting the low rates. And we don't have insight into who will. Any interview or quotes with Mortgage professionals? Any applicant feedback with promising results or example applicant profiles? Any regulatory pressure for truth in advertising if nobody is pulling down these rates?? C'mon.
  1. Lauren said at 3:05 pm on Wednesday September 7, 2011:
    Interesting issue, and kind of troubling. Right now if I go to Redfin and look at a $400,000 property, the default settings on the mortgage calculator are a 20% downpayment and a 3.875% interest rate, for monthly payments of only $1505/month. Sure you can adjust the defaults, but while it's straightforward as to whether you have the $80,000 for 20% down, many buyers could assume that since they have "good" credit, they'll get that interest rate. But if NO ONE is actually getting that rate, I think it's irresponsible for banks and sites like Redfin to advertise it and inflate expectations of buyers as to how much house they can afford.
  1. jag said at 4:56 pm on Wednesday September 7, 2011:
    +1 to Lauren. That constantly agitates me about Redfin. Completely irresponsible.

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