Chase Mortgage Refinance Rates Intentionally Inflated?

August 24, 2011 No Comments »


Those looking for a mortgage refinance may get a surprise if they bank with Chase.

The NYC-based bank and mortgage lender is currently advertising mortgage rates well above the national average.

The WSJ first reported on the “issue,” speculating that Chase is trying to pump the brakes on new loan origination because they’re “flooded with demand.”

For example, today’s refinance rates for a 30-year fixed are set at 5.00%, while a 15-year fixed is going for 4.375%.

The 7/1 adjustable-rate mortgage is pricing at 3.000%, while the 5/1 ARM is coming in at 2.625%.

chase refinance rates

These compare to rates of 4.375% for a 30-year, 3.375% for a 15-year, and 2.625% for a 5-year ARM seen over at top mortgage lender Wells Fargo.

wells fargo rates

That’s right, the 15-year fixed is somehow pricing an entire percentage point higher at Chase, while the 30-year is more than a half point higher. Hmm…

Perhaps they don’t have the manpower to originate, underwrite, and process all those would-be loans.

Maybe they’re focusing more on loss mitigation, including loan modifications and foreclosure decisioning, who knows?

A similar situation unfolded at Wells Fargo back in 2009 when the company said it couldn’t lower mortgage rates as much as it would like due to a high decline rate and lack of available staff.

Interestingly, Chase’s purchase-money mortgage rates are a completely different story.

purchase rates

You can get a 30-year fixed purchase mortgage for 4.375%, a 15-year for 3.50%, or a 5/1 ARM for 2.25%.

Their ARM rates are actually beating Wells Fargo’s handily, but only if you’re looking for a purchase.

[Why are mortgage rates different?]

And as we all know, nobody is looking to purchase a home in this market, despite those rock-bottom rates.

In fact, the Mortgage Bankers Association reported today that purchase demand hit its lowest point since 1996.

Yep, housing demand is at its lowest point in 15 years, at the exact same time rates are at historic lows. Makes you wonder if buying a home is a good move at the moment, right?

The moral of the story here is to shop around for your mortgage. If you want the best mortgage rate, don’t just get a single quote from the bank you do business with.

Gather mortgage quotes online (they’re free you know), speak with a few national banks, ask a friend for a mortgage broker reference, and check out some mortgage rate tables.

Otherwise you could wind up with an astronomically high mortgage rate, simply because you didn’t know any better.

Read more: What mortgage rate can I expect?

(photo: mae.noelle)

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