Jumbo mortgage shoppers in the most expensive U.S. housing markets such as New York and San Francisco aren't getting much relief from lower borrowing costs. The average 30-year fixed-rate for home loans of more than $729,750 remains almost 2 percentage points above conforming rates and the spread between them may set a record this month, according to financial data firm BanxQuote.Why?
Banks remain reluctant to lend. “The collapse of the private mortgage securities
market means lenders find there's little demand for jumbo loans they want to
sell.”
Good News
“If low conventional rates entice enough homeowners to refinance, jumbo home loans may become more affordable as loan payoffs add liquidity to the
banking system.”
“The average 30-year fixed jumbo loan rate was 7.32 percent on Dec. 22, compared with 5.38 percent for a conforming loan, according to BanxQuote of White Plains, New York. The difference between the two averaged 2.13 percentage points in December, 10 times the spread from 2000 to 2006 and above last month's 1.95 percentage points that was the highest on record. If current rates reflected the historical difference of 0.2 percentage points, jumbo borrowers with an $800,000 mortgage would save $913 a month.”
More Good News?
Buyers in markets that rely on jumbo loans, such as New York, San Francisco and Boston, may see rates fall in 2009 because of Federal Reserve chairman Ben Bernanke's plan to buy at least $500 billion of securities issued by Fannie Mae and Freddie Mac.
Here's the report from Bloomberg News
Vested Title Inc., 648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306.
Tel 201-656-9220. Fax 201-656-4506.
E-mail vti@vested.com - www.vested.com
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Tel 201-656-9220. Fax 201-656-4506.
E-mail vti@vested.com - www.vested.com
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