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.
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housing market · jumbo mortgage

Jumbo mortgage delinquencies could reach as high as 10 percent, Fitch Ratings reported, as defaults on prime jumbo mortgages continue to rise.

As serious delinquencies climbed for the 32nd consecutive month, loan performance among RMBs’s (private residential mortgage-backed securities) showed continued weakness.

Overall, jumbo mortgage RBMS at a minimum of 60 days past due grew to an astounding 9.6 percent last month, a rise from 9.2 percent the previous month, Fitch’s data shows.

The firm claims prime jumbo mortgage delinquencies accelerated in 2009, although they began to rise in mid-2007, almost tripling throughout the year. Although, Fitch does note that pre-2005 jumbo mortgage loan delinquencies still remain much lower than the most recent originations.
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foreclosures · housing market · jumbo mortgage