Jumbo Loans Availability and Rates Point To Growing Housing
Market:
Even as mortgage rates begin to rise, the difference between
conforming and jumbo loan rates is shrinking, and that is good news for buyers
of higher-priced homes. Conforming loans are largely financed by Fannie Mae and
Freddie Mac, and are valued at up to $417,000 — although they can be as high as
$625,000 in some of the nation's pricier markets.
Jumbo Loans are anything above that and are funded by banks or private investors. Rates used to be far higher for jumbo loans, but that is changing fast. As reported by the Mortgage Bankers Association, The spread between a jumbo and a conforming mortgage rate was as wide as 0.875 percent last summer. It has now dropped to between 0 and 0.25 percent as of Monday.
Jumbo Loans are anything above that and are funded by banks or private investors. Rates used to be far higher for jumbo loans, but that is changing fast. As reported by the Mortgage Bankers Association, The spread between a jumbo and a conforming mortgage rate was as wide as 0.875 percent last summer. It has now dropped to between 0 and 0.25 percent as of Monday.
The jumbo market has heated up, as tight lending guidelines have
drastically reduced consumer late payments, strategic defaults, and
foreclosures, this gives investors confidence to buy jumbos again, which means
lower rates for consumer borrowers.
The rebirth of jumbo
securitizations is being driven not just by investor confidence, but by growth
in jumbo originations, which increased after the conforming loan limit was
lowered. Originations of non-agency jumbo mortgages jumped by over 19 percent
in 2012 from 2011, according to Inside Mortgage Finance.
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