A glimmer of hope came recently when Redwood Trust Inc. launched the first issue of securities backed by jumbo loans in more than two years. No one expects that deal to immediately turn things around, but there are also signs that as credit standards have become tighter and home prices begin to stop falling, more banks may begin offering competitive rates on jumbo loans.
The high-end of the housing market has suffered from a lack of buyers for million-dollar-and-up homes in the last year. One big reason is that it’s harder to get a mortgage that isn’t backed by a government-related entity, and the loan limits on loans backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration top out at anywhere from $417,000 in much of the country to $729,750 in the most expensive housing markets….The average rate on the 30-year fixed-rate jumbo loan reached 5.76% at the end of April, according to HSH.com, a financial publisher. That’s near the previous record low of 5.55% from 2003. Mortgage bankers say that five-year adjustable-rate mortgages are available at rates nearly a percentage point lower. (Meanwhile, average rates on conforming loans fell to 5.02% last week, from 5.08% one week earlier, according to the Mortgage Bankers Association).
By Nick Timiraos, May 5, 2010 WSJ
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