Searching for mortgages

In a perfectly competitive market, all consumers and producers are price takers. In addition, the market will have many producers none of whom have a large market share, if consumers regard competitors as equivalent and producers have free entry and exit into the market. From the sound of it, the home mortgage business is a pretty competitive market. The home mortgage market? Sure, think about it. No one lender has a large enough market share to influence the market. If Third Federal Bank stopped doing mortgages you would probably not see blip on the radar. Same goes for Charter One, Key or Huntington. For the most part, consumers see mortgages as equivalent goods from one lender to the next. If you do your homework, the best deals all have comparable interest rates, points and closing costs. And finally producers have free entry into and out of the market. The last decade or so has seen a huge growth in mortgage brokers and with interest rates climbing (though still at historic lows) it’s safe to assume producers will continue to enter and exit the market. Last week the Federal Reserve bumped interest rates up again. Consensus is that should be it for awhile. So consumers will keep being price takers because there really isn’t much you can do about the rates. And producers will continue to be price takers because there really isn’t much they can do about the rate. With this market it’s all about taking what you can get while knowing when to get in and get out.