Irrationality of HML rates -- one size fits most?
By way of background, I've bought 8 SFRs in the last 18 months, 4 with conventional loans and the other 4 in cash. These properties are worth approx. $2.5mil, and I owe less then $700k on the mortgages, so net equity of $1.8mil. I have very generous cash-flow.
I am having trouble getting additional conventional loans, so have been exploring hard money options. I've been really surprised to find that the rates are essentially the same regardless of LTV, and regardless of my other personal assets I am willing to guarantee.
While I realize at it's core HML is asset-based, it's crazy to me that the rates don't adjust much or at all, based on the LTV and net-worth and credit worthiness of the individual guarantor.
Someone who is relatively new to the business, has a 650 credit score and is borrowing at 70% LTV appears to get the same HML lending rate as someone like me with a 700+ credit core, < 40% LTV, and significant net worth personally pledged.
It feels like there's a market to be made charging lower HML rates for lower risk investments given the above, no? Why would HML's not lend at a significantly lower percentage for much lower risk investments/individuals?