One of my luxury property Realtor friends just forwarded an article from our local newspaper about luxury buyers "rushing to beat jumbo mortgage deadline". The gist of the article was to sound the alarm about the September 2011 expiration of the temporary increase in Fannie and Freddie loan limits applicable to high-cost areas. These are good loans if you can get them, because they are priced very close to the conforming loan pricing and generally come with more flexible underwriting terms.
The article notes that limits will be reduced from $729,750 to $625,000 in September, which is accurate if you happen to live in certain tony neighborhoods in California or Maryland. They are a bit over the mark, however, if you dwell in more modest locales - including virtually all of Washington State where I hail from - which are currently capped at $567,500 in the richest 3 counties and less just about everywhere else. Hardly the stuff that luxuriant lifestyles are made of.
I guess it makes for good reading if you are trying to create a sense of urgency in luxury buyers, but, the reality (and a better story for all of us with a vested stake in the real estate market) is that traditional jumbo mortgage interest rates have already come way down from their highs during the financial crisis and the spread between conforming and jumbo interest rates (upward of 2.75 to 3 points at the height of the crisis) is now sitting only about 5/8th's and narrowing. This is good news for all properties because it is symptomatic of a market that is returning to normalcy and this, is good news indeed.
The opinions expressed in this article / post are entirely my own and do not necessarily represent the views of Guild Mortgage Company.
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