Jumbo Loan Liquidity returning to Normal

By Michael Mapes, The Responsible Mortgage Lender.com

During the month of August as the liquidity issues gripped the market and the news of a global credit crunch became reality one of the first segments to feel the pinch were those borrowers wishing to borrow in excess of 417,000 on a home.  The rush to judgement for these loans was so sever that the 30 year rate went from 6.75% one day to over 8% the next.  As the institutional investors sold off their positions in these products and refused to purchase these so called "risky" loans, the real estate market went into a further tailspin. 

However as the noise is settling down we are beginning to see the investors return to these products.  As of today we have witnessed a decline in real interest rates for these loans back to the 6.875-7% range.  Traditionally Jumbo loans have been  .25 or 50% higher than that of conforming loans.  We are seeing this trend develop and its likihood of continuance is good.  As the Institutional investors once again begin to have confidence in what they are buying we should see Jumbo Rates move a bit lower. 

In recent weeks as I have talked with Realtors and builders alike they are also seeing Jumbo buyers show back up at open houses and model homes to look.  While no one seems to be able to predict the future, one this is sure and that is the Jumbo market will not go the way of sub-prime loans.

Michael Mapes can be reached at 757.599.1810 ext 225 or on the web at www.theresponsiblemortgagelender.com