Are Jumbo Loans gaining confidence
Jumbo Loans are residential mortgages that are more than the conventional loan limits as set by Fannie Mae or Freddie Mac. This results in a smaller pool of investors willing or able to fund these resulting in higher costs for the buyer, hence the name Jumbo Loan.
Higher Delinquencies
As of early 2010 Jumbo Loans represented a very high risk for delinquency:
Overall, delinquencies of 60 days or more on prime jumbo loans that were packaged into securities and sold to investors rose to 9.6% in January, up from 9.2% in December and 3.7% a year earlier, according to the report by the Fitch Ratings agency in New York.California, which comprises 44% of the market, saw its delinquency rate rise to 11.3% in January from 10.8% in December and 4.1% a year earlier. ref – LA Times
However…
Even though delinquiencies are high on Jumbo Loans investors are showing signs of confidence:
Two weeks ago, the average interest rate on 30-year fixed-rate jumbos dropped to 5.79%, a nearly five-year low, according to rate tracker Informa Research Services of Calabasas. It edged up to 5.88% on Tuesday, still very attractive by historical standards. The average is down from well above 7% in late 2008.Rates are even lower on so-called hybrid adjustable mortgages, on which the rate is fixed for, say, five years and then adjusts annually. Kelly’s new loan is a five-year hybrid adjustable identical to his old one, except that he’s paying about 5%, down from 6%. – ref – LA Times
As you can see there is a lot of movement in the market right now. While the number of delinquent Jumbo Loans are rising we are also experiencing new confidence from investors in this market. Now may be a good time to look at your Jumbo Loan mortgage and consider refinancing.
We suggest talking with an experienced finacial professional about Jumbo Loans.
