The newest drop in rates doesn’t seem to be doing much for conventional loans, but for jumbo loans it is a different matter. Those at higher income levels might not be as worried about jobs as others. Currently it seems that the best hope for the housing market is to keep these rates lower. Now big banks are joining the charge to give out jumbo loans. Mortgage brokers are still more qualified to handle your jumbo loan.
How low are the current jumbo rates? Last year at this time, a 30-year fixed jumbo rate was averaging more than 6 percent. It’s now at an all time low average of 5.07 percent. And the re-finance rate for a 30 year jumbo is currently at 5.30 percent. A fifteen year jumbo is at the historic low average of 4.68 percent.
The market has shifted from one extreme to the other; now lenders require high-net borrowers to put down as much as 40 or 50 percent for a down payment compared to only 20 percent a few years ago. Borrowers must also have good income, strong credit scores of 700 or better and sufficient financial reserves. In addition these creditworthy buyers are waiting longer to close their jumbo mortgages while banks intensely study financial documents and complete their due diligence. Low and no down payment and adjustable rate schemes are no more.
The biggest mortgage players — agencies Freddie Mac and Fannie Mae — increased conforming loan limits from $417,000 to $729,750, cutting more than $312,000 off the jumbo market that once was the optimal area of gain for brokers. The sky may be lightening however, credit is relaxing , interest rates are low again, new creative loan plans are making an appearance and repressed demand for high-end housing is anxious to enter the market. Unlike conventional mortgages, jumbo loans by definition exceed the conforming loan limit of $417,000 set by Fannie Mae and Freddie Mac. Jumbo rates are loosely tied to long term treasuries but they are traditionally higher because of the risk involved for the banks in making a larger loan. Strict or not, the banks are lending and refinancing jumbo loans at much higher volumes than last year.
If you are looking to get into a jumbo rate mortgage or are interested in refinancing your current jumbo loan please contact the jumbo loan expert.
