Mila Adams moved to Utah in May with her husband and toddler son to be closer to family, but they didn’t expect to be living with her husband’s parents nearly a half year later.
Analysts say the average rate on a 30-year fixed mortgage, which crossed the 7% threshold recently, could be as much as a full percentage point lower if investors, homeowners and prospective buyers hadn’t been shifting their behavior so sharply in reaction to the Fed’s moves. Finally, there is an additional amount of interest charged that reflects the profits that lenders, servicers and other players make in the mortgage chain.Many banks and other lenders don’t hold on to the mortgages they originate. Instead, they package them into bonds that they sell to investors. The payments that homeowners make, including interest payments and prepayments, then flow through to those investors.
It hasn’t helped lenders that two of the biggest holders of mortgage-backed securities have pulled back from the market. The volatility in the mortgage market is hitting real estate investment trusts, or REITs, which are publicly traded companies that originate mortgages and also buy the bonds backed by them. REITs are a relatively small but important part of the market because their MBS purchases go toward helping Americans finance their homes.
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