Jumbo Loans Availability and Rates Point To Growing LOUDOUN COUNTY Housing Market   

Even as mortgage rates begin to rise, the difference between conforming and jumbo loan rates is shrinking, and that is good news for buyers of higher-priced homes. Conforming loans are largely financed by Fannie Mae and Freddie Mac, and are valued at up to $417,000 — although they can be as high as $625,000 in some of the nation's pricier markets. 

Jumbo Loans are anything above that and are funded by banks or private investors. Rates used to be far higher for jumbo loans, but that is changing fast.  As reported by the Mortgage Bankers Association, The spread between a jumbo and a conforming mortgage rate was as wide as 0.875 percent last summer. It has now dropped to between 0 and 0.25 percent as of Monday. (As an example we have Jumbo loans up to $1.5M, 75% LTV @ 4% today)

The jumbo market has heated up, as tight lending guidelines have drastically reduced consumer late payments, strategic defaults, and foreclosures, this gives investors confidence to buy jumbos again, which means lower rates for consumer borrowers.

The rebirth of jumbo securitizations is being driven not just by investor confidence, but by growth in jumbo originations, which increased after the conforming loan limit was lowered. Originations of non-agency jumbo mortgages jumped by over 19 percent in 2012 from 2011, according to Inside Mortgage Finance.

What Happened to Rates Last Week?

Mortgage backed securities (MBS) gained +42 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move to lower.   We had our highest mortgage rates on Monday and our lowest rates on Friday. 

Retail Sales were much stronger than expected (1.1% vs est of 0.5%) and Initial Jobless Claims dropped again.  These two positive economic reports pressured MBS.  But offsetting that was very tame inflationary data from both the PPI and CPI reports and a much weaker than expected Consumer Sentiment Index (71.8 vs est of 78.2).  The last report hit Friday and was responsible for a large increase in demand for MBS which in turn helped to improve mortgage rates. 

Brought to you by:

Harold (Hal)
Senior Loan Officer
Office: 7032798810
Cell: 703-507-1572
hjohnson@embracehomeloans.com

Embrace Home Loans
10306 Eaton Place
Fairfax, VA 22030
NMLS 233808

www.embracehomeloans.com 

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