Business of Banking

It is no surprise that rates are a historic low. Rates on 30-year fixed-rate mortgages averaged 4.12% for the week ending Sept. 8, down from 4.22% last week and 4.35% a year ago. The mortgage’s previous low was set the week ended Aug. 18, when the rate averaged 4.15%.

With economic concerns worldwide, high inventory in many markets throughout the country and demand low, rates are expected to stay fairly low; Rates haven’t been above 6% since Nov 2008.

However, with many of the smaller lenders and banks disappearing from the market, how long will rates realistically stay this low?  At the end of June, there were 7,522 commercial banks, down from 8,542 on Dec. 31, 2007. That is a decline of nearly 12 percent in just three and a half years. Since 2007, the share of assets held by banks with more than $50 billion grew from about 65 percent of total assets to nearly 69 percent. (Banktracker, MSNBC)

With the current outlook, it may be no surprise that more banks may fail, be taken over by the FDIC, or acquired by other larger institutions. Furthermore, smaller banks may not be able to currently compete with larger online only institutions.

The effects may not be known until recovery fully occurs and there is more of a balanced market. But by then, the market could be controlled by a handful of institutions, either online or brick and mortar. With a healthier market, there would be no argument for keeping rates low and with just a handful of players supplying the majority, the game could completely change.

Perhaps like many other homeowners who purchased long ago, now would be an attractive time to consider a refinance.

Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Originally posted at

Sherwin L. Sucaldito, REALTOR®, GREEN, ABR, CRPM
The Institute of Luxury Home Marketing
Green REsource Council, GREEN
Accredited Buyer’s Representative , ABR
Certified Residential Property Manager, CRPM
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