Unusually high jumbo mortgage rates almost paralyzed the high-end housing market for purchasers and sellers most of the past year. Banks found themselves unable to sell large risky home loans as securities to investors in the secondary market due to the credit crunch.

Rates, however, have come down dramatically in recent months, arousing more interest from consumers.

Jumbo mortgages are typically more than $419,000, and super jumbo mortgages are more than $729,000 in towns with expensive real estate.

New Jersey ranked second, nationally, in the number of jumbo mortgages issued last year, according to CBMI, a Fairfax, Va., company that tracks trends in real estate. Nevertheless, the number of jumbo mortgages in the state has dropped over the last five years. Last year, less than 16,000 jumbo mortgages were made or refinanced just in New Jersey — down from 57,122 in 2005.
(more…)

No tags

Rates for a jumbo mortgage — loans of more than $729,750 in counties with the highest-cost housing — shot up during the financial crisis as lenders and loan investors shunned anything tainted with even a whiff of higher risk. Rates on jumbo mortgage were especially high relative to those on smaller loans.

But in a boon for borrowers in California’s expensive housing markets, the jumbo mortgage market is beginning it’s return to normal.

Two weeks ago, the average interest rate on 30-year fixed-rate jumbo mortgage dropped to 5.79%, a nearly five-year low, according to Informa Research Services. It inched up to 5.88% on Tuesday, still very attractive by historical standards. The average is down from well above 7% in late 2008.

Rates are even lower on so-called hybrid adjustable mortgages, on which the rate is fixed for, say, five years and then adjusts annually.
(more…)

housing market · jumbo mortgage