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Caveat, haven't done a lot of research on this but:
A couple years back when rates were at their low, you had to kill yourself to get more than 1% on a savings account, yet 30 year mortgages were still in the 5%+ range. Now you can get 5% or close to it just about anywhere with your money, yet mortgage rates are just a little over 6%. Like we all learned in "It's a wonderful life" the bank makes money on the spread, and that spread is shrinking. Now I know I'm vastly simplifying here, but along with lending institions resorting to more sub-prime lending, anybody else out there short on this industry? We've beat to death the whole forclosure risk thing here, but even loans that don't go bad aren't the revenue generators they once were, so there is less to absorb the increasing bad loans, right? Is this tied into the inverting yeild curve Brewer pointed out - i.e. a ramification of?
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