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Window of Opportunity: Jumbo Loans are Back

Posted by Breckenridge Associates Real Estate on Saturday, August 24th, 2013 at 11:46pm.

Buying an expensive home can be a very copious decision.  But now is a great time to purchase a luxurious home.  During the housing boom, jumbo mortgage loans were a hot item.  When the market turned for the worst, jumbo loans were hit hard.  With the housing recovery consistently getting better, jumbo mortgage loans are starting to resurface and offer interest rates and terms to buyers that are similar to a loan on a less luxurious home.

The high-end home market was stagnant during the housing bust.  Now, with the option of purchasing with a jumbo mortgage loan, more buyers are able to consider purchasing these luxurious homes.  On a national level, the annual dollar volume of a jumbo mortgage loan is on track to be the best since 2007.  Banks and lenders are starting to offer these loans which shows signs of confidence in real estate.

Recently, the demand for jumbo loans is on the rise.  Lenders are taking the opportunity to gain on these deals as the housing recovery prices continue to stabilize and improve, along with better than expected economic reports.  According to Inside Mortgage Finance, jumbo loans totaled $203 billion dollars in 2012.  After the first quarter for 2013, it reported $54 billion- pacing that for the year-end of 2013, it could total $216 billion dollars.  About 7% of that first-quarter volume was bundled and sold in the secondary market to private investors.

Fannie Mae and Freddie Mac are charging higher fees making the spread between conventional loans and jumbo loans smaller.  According to the financial publisher HSH.com, the interest rate on a 30-yr. fixed, jumbo rate loan at the end of June, was only 0.17 percentage points higher than a conventional loan, compared to 0.5 percentage points higher in 2012.  In 2008, that spread was as large as 1.8 percentage points, with a 30-yr conventional loan charging 5.2 percent interest and a jumbo loan charging 7 percent interest.

The spread is so close now and lenders are showing signs of wanting to do business now.

Please contact us to learn about real estate opportunities in Breckenridge and Summit County, Colorado. 800.774.7970 or 970.453.2200.
Source: RISMedia, Chicago Tribune, "Jumbo Mortgage Loans are Back on the Table"

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