Jumbo Mortgages Are in Demand as High End Home Sales Increase
By: Rosemary Rugnetta | December 14th, 2012
As the housing market recovery continues to take shape, home buyers are out and actively looking for affordable homes. This is true for the luxury home market as well. With this happening, high end home sales are increasing and jumbo mortgages are in demand for the financing of these properties.
Jumbo mortgages are necessary for financing that is above the conforming and FHA loan limits. Although these loan limits can be high in more expensive areas, the high costs of luxury homes will typically require a jumbo mortgage. According to The Wall Street Journal, sales of homes priced between $750,000 and $1 million increased 53% in October as compared to a year ago. The WSJ also reported that home sales in major metropolitan areas that had a loan of $1 million or more were up approximately 28% through September as compared to a year ago. This is the highest total reached since 2008, according to DataQuick, a real estate information company.
While prices for high end properties continue to be down from the peak of the housing boom, home buyers are picking up what is actually a bargain. Low inventory of these homes is creating a quick turn around in sales of these properties. At the same time, the jumbo loan market has turned around this year and has become more competitive as more lenders are entering this end of the loan market. Even though these lenders usually hold jumbo loans within their portfolio, asset growth is allowing them to offer more of these loans to well qualified borrowers.
Competition for jumbo mortgage business is also leading to better jumbo mortgage rates. Jumbo mortgage rates are slightly higher than conforming mortgage rates, but lenders have more flexibility when quoting a loan. This increase in competitive rates is making it necessary for home buyers to shop around quickly for the most favorable deal out there. Borrowers can easily shop multiple lenders when submitting the online inquiry which will return a response almost instantly.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.
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