Interest rates on jumbo mortgages fell below those of 30-year fixed rate mortgages for the first time in history, according to a report published by NAR today. Jumbo loans are those over the local limit that can vary from $417,000 to $729,750, depending on the county.
Since a significant number of homes in the South Bay are priced well within that range, the accessibility and availability of jumbo loans to qualified buyers is a critical part of a healthy housing market in our area.
Traditionally, jumbo loans have cost consumers more than a conforming 30-year fixed-rate loan. However, NAR found that "with mortgage rates much higher than a year ago and declining profits from refinances, banks have become more aggressive in pricing mortgages. As a result, it is now cheaper to borrow in the jumbo market which is currently dominated by private lenders."
This milestone in jumbo rates comes along at the same time that REALTORS are pressuring the Federal Housing Finance Agency (FHFA) not to reduce loan limits and effectively redefine what a jumbo loan actually is. NAR is still looking for assurances that FHFA will not unilaterally reduce loan limits just because it wants to; FHFA simply has no authority to do so.
Now, with the timing so close, are reduced jumbo loan rates and FHFA action somehow related? Probably not. To quote one of our favorite lines from The West Wing, "Hard to tell." Correlation is not causation, although the increased conversation is certainly welcome.
