Mortgage Auction Attempts to Lower Mortgages

In a market that is becoming more competitive, a website has been started that has lenders bid for mortgages. The site bundles similar borrowers together with the aim of giving them bulk appeal.

A real time auction site has been started to make mortgages more appealing to lenders. Common loans and borrowers are bundled together, than up to 14 lenders bid for the bundle. The lowest bidder secures the business. Experts warn that while this might sound good, few lenders are participating and borrowers may find it better just to shop around.

Borrowers are sorted by loan amount, type of mortgage desired, the size of the loan compared to property value and credit rating. A real time auction then begins, with lenders bidding lower than others to secure the business. The idea is that more people bundled will get a better deal than the people would independently. Acquisition costs are lower to the lender, and the rates are lower to the borrower. But only 105 of authorized lenders are ready to participate in the auction, making the benefit questionable. The site says that until more companies get registered on the site, borrowers can still use the information provided to compare lenders to their own banking companies.