Low Jumbo Mortgage Rates Helping California’s High Priced Home Markets
By: Rosemary Rugnetta
August 19, 2010 (FreeRateUpdate.com) – While California may have been one of the top states with foreclosures during the housing meltdown, it is now leading the way in the recovery of the high priced home market. With jumbo mortgage rates at their lowest since 2003, buyers are taking advantage of this opportunity to purchase or trade up to a bigger home. Low jumbo mortgage rates are helping California’s high priced home markets recover from their three year slump that practically made them obsolete.
People in California are beginning to see that there are great deals to be found in the high end real estate market. Buyers who have cash are benefiting from the low jumbo mortgage rate which is currently at 5%. With so much speculation as to whether rates will go lower or higher, people are getting into the market now so that they don’t miss out on a perfect opportunity, lower home prices and lower mortgage rates.
At the height of the financial crisis, jumbo mortgages were basically gone. Since lenders had to hold these loans in their portfolios, they no longer were willing to take the risk on new loans. Investors were more interested in the security of government backed securities and turned their backs on the private lender group. This is turn closed up the real estate market for high end homes bringing it to a stand still since the meltdown.
As banks now have more capital on hand and are ready to lend, they are aggressively seeking out the jumbo mortgage borrower. Jumbo mortgage applications have continued to rise over the past few months as rates continued to get lower. This group of borrowers have higher incomes, stable jobs and enough money to come up with the 30% to 40% required down payment. Although underwriting standards are much stricter than they were years ago, people are still finding it easy to qualify for a jumbo mortgage. Those with credit scores in the 700s and enough money for the sizable down payment are finding good deals with both housing and rates. Since the jumbo mortgage market has begun to breathe again, sellers are eager to be a part of it and have become more flexible with their asking prices. With more affordable rates being offered for jumbo mortgages, opportunity in the high end market is opening and should assist in stabilizing home prices in this area.
Since jumbo loans are available to those with excellent credit, banks find that lending to this group is both safe and profitable. More banks are starting to plunge back into the jumbo mortgage market and, in effect, creating competition for business. This trickles down to more competitive rates, more business and more high end homes being sold. As low jumbo mortgage rates are helping California’s high priced home markets come alive again, it will be interesting to see if interest in low jumbo mortgage rates continue to sprout throughout the country thus leading the way for the well anticipated housing recovery.