For the fourth week in a row, we are going to set a record for the lowest rate in the nearly 25-year history of Bankrate's weekly mortgage survey.
Last week the 30-year fixed averaged 4.75 percent in Bankrate's survey. When the survey is conducted today, I expect it to fall to around 4.66 percent.
Here's the wacky thing: Rates should be even lower. The yields paid on mortgage bonds are falling faster than the rates that consumers pay. Think of the last time that crude oil prices fell dramatically, while the price of gasoline at the pump barely went down at all. That's sort of what's happening to mortgage rates.
If the market were working as it was a month ago, the 30-year fixed would average around 4.45 percent today. But it's probably 20 basis points higher than that, to the benefit of the biggest banks.
The top five mortgage lenders owned 63 percent of the market in the first three months of the year. That is powerful market concentration. The mortgage business is almost a cartel. I wouldn't be so bold as to accuse them of price fixing, but the big banks -- Wells Fargo, Bank of America, Chase, GMAC and Citi -- have tremendous pricing power. On top of that, every federal regulatory and statutory decision has gone their way in the last two years.
In short, I believe that the federal government, through the agency that administers Fannie Mae and Freddie Mac, is recapitalizing the big banks by making sure that their mortgage divisions make big profits when they sell to Fannie and Freddie.