Mortgage Rates: Cold Reality Forces Jumbo Mortgage Rates Lower
By: Jeff Bowman
The driving action in jumbo mortgage rates and especially fixed jumbo loan rates is the overall movement in the broader global debt markets. This week we had a great rally in the bond market following less than promising economic news and an earnings call out of JPMorgan Chase & Co that alerted investors that the credit meltdown is still well underway.
How does all this news matter to a person waiting to refinance a jumbo loan or buy a new luxury home? The smart money is seeing this window of opportunity to lock in 30Y fixed jumbo loans and 15Y fixed jumbo mortgages in record numbers. This winter’s data clearly shows that the mortgage and overall credit crisis is only halfway done at best.
Markets are a minute by minute battle of the optimists and pessimists. The optimists held the prevailing market view following the huge economic stimulous in 2009 that the seeds of recovery were beginning to push through the fertile soil of ultra low interest rates, bailout programs, and a stabilization of credit markets.
The little shoots of growth we started to see in the fall have been stopped by the ice cold reality of:
- 10% + unemployment nationally
- 37 million people on food stamps (up 20% YoY)
- 8-10% credit card accounts are 60+ days late
- 9.2% of jumbo loans 60+ days late (up 300% YoY)
Trillions of investment dollars are searching for a safe home to weather this cold snap. Low risk prime mortgage paper and government securities are the overwhelming choice. We see the biggest window of opportunity in the fixed jumbo mortgage which closed on Friday at 5.75% paying 1 point in most markets. 
Another structure that may make sense for the homeowner with a certain time frame is the 5Y Fixed ARM which we offer at 3.75% paying 1 point in most markets.As always, the best mortgage rates are driven by the particular loan to value and overall credit risk. Having a borrower with an 800 FICO is nice, but having an 800k cushion of equity sure makes this jumbo mortgage banker more comfortable to lend during this cold unforgiving economic environment.
Make it a prosperous day.