WSJ: Small Banks Offering Lower Mortgage Rates

• August 16th 2010

by Mark Wellborn

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If you thought that last week’s 4.44 percent 30-year fixed rate mortgage was low, you may be surprised at the rates being offered by smaller banks across the country.

While it is not uncommon for local banks to offer better rates than national institutions like Bank of America and Wells Fargo, The Wall Street Journal is reporting that the gap between the big boys and the smaller players in the mortgage business is widening:

On average, the three biggest banks—Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co.—offer rates of 4.66% on 30-year fixed mortgages for home purchases, according to Bankrate.com. By contrast, St. Louis’s Heartland Bank is offering a rate of 4.50%. Acacia Federal Savings Bank comes in at 4.25%. And Rockland Trust Co. in Boston is offering just 4.13%. (None of these offers include “points,” or extra fees to secure lower rates.)

The Journal noted that smaller institutions are able to offer these lower rates because they have less overhead and their brokers work on commission not salary, so there is a need to offer a more compelling rate to the customer.

It is important to note that the historically low rates are a little deceiving. In order to take advantage of the lowest available rates, applicants must have excellent credit scores and little to no debt.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/wsj_small_banks_offering_lower_mortgage_rates/2380.