Very good logic, but it might not be completely true, since beside Mortgage, bank is heading for other products as well. i.e Visa, accounts, line of credit... also remember, most line of credit has rate of 8.5% or 9%
Also bank is looking for $$ for investment, mutual fund, stocks....etc they can earn bank in billions of $$s, if bank makes millions of $$ or high %. Can't bank gives 8% to client, and turn around and invest them and make 25%.
If you are right, why banks always fight for their low % mortgage? My friend, mortgage is one of the many tools/products to attract client to their bank. Mortgage is not the whole world.
My money safe and sound
and
My common sense is alright~