Bankrate's weekly mortgage rate survey is a snapshot. For the weekly survey, our researchers query the same 100 lenders every week -- 10 lenders in 10 large markets. It takes just a few hours, and most of the work is done in the morning. The result is a snapshot of a brief moment. Maybe a better metaphor is that we emerge with a single frame in a motion picture.
In yesterday's survey, mortgage rates fell to modern-day record lows. The 30-year fixed fell to 4.5 percent. This week happens to be the 25th anniversary of Bankrate's weekly survey of the 30-year fixed, and it happens to be the record low.
Meanwhile, mortgage rates were dropping through the morning. We snapped a shot of the 30-year fixed at 4.5 percent, but if we were making a movie, we most likely would have shown mortgage rates descending below that mark, before hitting a floor around mid-day.
Different surveys use different methodologies, occasionally ending with conflicting results. For example, LendingTree.com began doing a weekly survey this year, and this week's survey shows a slight increase in the average mortgage rate offered.
When you look at the yields on mortgage-backed securities, it's apparent that mortgage rates could be lower. Essentially, banks' wholesale cost of money has gone down a lot, and they have passed on only some, not all, of the savings to consumers. (Note to bankers and brokers: Yeah, I know what wholesale lending is. I'm talking to consumers, not to you, in terms that consumers can easily understand.)
Cameron Findlay, LendingTree.com's chief economist, explains: "Spreads have widened, meaning rates -- although currently low -- could afford to go lower, but remain relatively high due to the volume of applications hitting the market. This translates to rates being disproportionate between lenders, for example, lender (A) offering a rate of 4.25 percent and lender (B) 5 percent."
When lenders have as many applications as they can handle, they can stop the flow of new applications by raising rates. That's what Findlay is saying. This is why, at a time of high loan volume like today's, it pays to shop around.