As long as I’ve owned a home, I’ve had a mortgage. The mortgage I generally have had is usually through whatever lender came through at the time of my home purchase, but isn’t necessarily one of my choosing – it hasn’t mattered much on the company though, because as long as the mortgage rate was what I agreed to, it didn’t matter to me. Within a year or so of buying the home and establishing the mortgage, it always seems that the initial lender “sells” off the mortgage to another institution or bank. When/if that happens, the new company assumes the same terms and my mortgage remains unchanged. Same thing when I have refinance the home – the refinance company comes in with a better rate (used to, at least) and within a short time frame, sells the mortgage off to another company. To make things even stranger, this has happened to me even with an established mortgage of several years with the same company/bank. I can’t fathom why/any benefit the banks get from doing this.
TL;DR: why do banks sell/transfer mortgages around if there is no change to your term? How does it benefit them?
In: 293
Say you work at a bank and have some cash on hand. Obviously that’s money that should be loaned out. It could be earning a return but it’s currently not. Ok, so you find a borrower who meets the least stringent requirements you have in terms of likely return because, hey, that’s better than nothing.
Tomorrow another borrower turns up whose expected return is much higher. Well, sucks for you because you don’t have money to lend. It’s just been lent to the previous borrower. However, you could sell that loan to someone else to get cash to lend to the new borrower.
This is just an example, but the general answer to your question is “the bank needs liquidity for some reason.”
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