Why are morgage rates up?

[Eric Healy]

Can someone explain why morgage rates are increasing despite the Fed drop to 0%?

[Chris Mason]

Variance in between my top 5 go-to lenders is usually like 0.25% highest to low, usually there's 2-3 of them tied for first place (exact same rate, +/- $500 in closing costs), so you go with whomever the service/speed/communication leader is.

Today, the high/low variance for those exact same 5 lenders is 1.5% to rate! Two have product priced to move, the rest are trash, they do not want more business.

It's capacity. Throw out all that stuff about the t-note and MBS. There aren't enough underwriters, no one is staffed for this. Lenders are pricing themselves out of the market until their underwriters catch up, then lowering rates a ton until back at capacity, then jacking rates right back up once they've gulped in a bunch of refi applications. 

I feel sorry for the loan originators tied to just one bank or mortgage company. On my end as an independent broker, I get to sit here and snipe.