All-time low mortgage rates, coupled with belief that the economy is finally recovering, have caused an increase in the demand for home loans and refinancings. In fact, there been so much of a surge that banks are having a problem processing the paperwork in a timely manner, causing a log jam.
But instead of hiring more staffers, mortgage bankers are using the situation to add to their profit margins.
In the end, home buyers and refinancers are waiting way longer than they should be!
Additionally, this may not be a long term issue. As housing prices increase, the demand from investors, wholesales and property flippers will slow down. Financial institutions are slow to respond until they can see a long-term corporate benefit rather than a short-term help for a typical consumer.
The banks are looking to prevent mortgages on their books from refinancing, so they can benefit from the high coupon rate, or servicing income stream. The banking sector is not very competitive these days and the four large banks control a larger share than ever, so they are able to exert oligopoly control.