why does lenders transfer loan/mortgage and what’s in it for them?
In: Economics
if you are locked in with a super low rate and are not likely to refinance that means the lender is locked into that low rate too. so if you run a small lending company and you have a significant fraction of a million dollars tied to a<3% interest, but new loans cost ~6%, you can sell that low rate loan to someone else who is happy for the 3% guaranteed (big banks) so now you have that money to go loan out for a higher rate. as a smaller business your capital is limited and so you need to chase the higher rates, where big banks are more stable and will take up the low rate loans as a cornerstone of income, while still having the capital to go after new high rate loans too. I am quite sure anyone with a >6% loan is not getting sold to other lenders.
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