Submit Feedback
Member Login
Blogs Homepage
Featured Entries
Recent Entries
Recent Comments
Tags
My Starred Entries
Create A BlogGood news on Jumbo Loans |
Posted at Los Gatos, California by Chris Morris
Oct. 8, 2009
Good News! Movement on Jumbo Loans
For the first time in nine months we have had lower interest rates on jumbo loans. Loans over $729,950 started the week at 6.625%. On Wednesday they dropped ¾% to 5.875%. That is a huge movement for one week and the best news we have seen on jumbo loans in a long time.
There is also a rumor in the marketplace that some of the lenders are about to loosen the rigid reserve requirements that we have seen since the jumbo loan market crashed. Lenders raised their liquid assets requirement and have not counted money in retirement accounts and several other investments as liquid assets. Either lowering the reserve amount or counting retirement accounts as reserves would help more buyers to purchase upper price range homes.
Lenders are not going to get silly again. They still want “A” properties and “A” buyers for jumbo loans since these are normally packaged and sold in the secondary market. That market has been non existent for the last year and will only come back when investors have faith that the loans are solid. Loan requirements will get back to what was normal over time; it’s just going to take a while. The rate movement is a good sign of a return to normalcy.
With the cost of funds dropping to between 2% and 3.25%, depending on what index you are using, banks have room to lower rates. They are still making more money that normal on home loans. The normal markup on conforming loans has been about 1% over the cost of funds and jumbo loans are normally round 1% over that. Right now the major banks are trying to get their bottom lines healthy again and pay back the federal government. After that happens and we get some competition in the market, you may see jumbo rates go down a little more.
The big kicker in the whole interest rate thing is the federal deficit. That threatens to undermine the entire lending picture as it did in the early 1980’s. If there is not enough liquidity in the lending market the U.S. Treasury Securities go to the front of the line for many investors because they are government insured. If the government has to raise its rates to attract investors you will see home loan rates rise with the cost of funds. That is what caused the 20% mortgages in the early 80’s. It could happen again if the federal government does not get its deficits under control. Thanks George W!
Hey, this week is about the good news! With the drop in jumbo loan rates, a lot more properties in this area of Santa Clara County just became more affordable.
Our upper end homes have been lagging a little and this should stimulate that part of the market by allowing more buyers to qualify for high end homes.
If I can show you how to have an easier, smoother transaction, would you work with me?
Chris Morris
Broker Associate
Alain Pinel Realtors
408.357.8783 direct
Brokers License 00780130
Word of the Day
Ask the Experts
Question of the Day
Member Login
Join RealTown
Request Password
RealTown RSS Feed
1. links of london
Chipotle Mexican Grill links of london jewellery . The fast food at these casual links of london eateries feels slow, links london jewelry thanks to organic ingredients cheap links of london , custom combos, link of london and an emphasis on freshness. links of london sale Traffic is down at many locations, links of london jewelry but the company has been able to compensate by raising prices, links london Olive Garden. links of london Charms More food for less money hits the sweet spot these days, links of london Charm which makes the family-style portions at this casual Italian chain a hit with diners. links of london Necklaces Olive Garden is a division of Darden Restaurants, links london Necklace which also operates Red Lobster, links of london Bracelets Longhorn Steakhouse, links london Bracelet and a few smaller chains. links of london Sweetie Bracelets Olive Garden has been the best performer of the bunch, links london Sweetie Bracelet with same-store sales down slightly but overall sales up, links of london Friendship Bracelets thanks to about 35 new outlets that have opened over the past year. links london Friendship Bracelet That helped boost overall earnings for the company by 15 percent in the most recent quarter.