Robert McLister·General·September 19, 2008Lending Spreads Lending spreads are the difference between a lender’s cost of funds and what that lender sells a mortgage for. For example, a lender may be able to raise capital in the mortgage backed securities market at 4.00% and sell a mortgage to the borrower at 5.50%. That 1.50% difference is the “spread.” When investors perceive added risk (or less return) in the mortgage market, spreads tighten. As a result, profit for lenders decreases and mortgage rates often go up to compensate. Like news like this?Join our CMT Updates list and get the latest news as it happens. Unsubscribe anytime. SUBSCRIBE! Thank you for subscribing. One more step: Please confirm your subscription via the email sent to you.