Should Rates on Mortgages Be Lower?

Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower. For months, a key interest rate on mortgage-backed securities, known as the current coupon yield, has tumbled faster than average U.S. 30-year mortgage rates. In recent weeks, the difference between the two has flirted with levels seen in the aftermath of the financial crisis. Some say the wide spread shows the large banks that dominate the mortgage market are flexing their muscle by keeping prices relatively high. Others argue the gap reflects increased regulatory costs, risks and new realities of mortgage making.

Wall Street Journal  February 22, 2012