Good Morning Midland! This is a really good morning, nearly two years after the credit crunch froze mortgage markets, borrowers are finally seeing some relief: rates for “jumbo” mortgages on pricier homes are at their lowest since 2003 says a recent Wall Street Journal article.
Just a year ago the average rate on a 30-year jumbo mortgage–a loan of more than $729,750 not backed by a government-sponsored agencies Fannie Mae or Freddie Mac was “6.86%, according to Greg McBride, a senior financial analysis at Bankrate.com. Now it is 5.48%–a rate that rivals those available during the height of the credit bonanza” (WSJ).
The lower rates signal relief for homeowners looking to shed an burdensome mortgage–and for the high-end housing market itself. More-affordable loans will help stabilize prices and for consumers and the lower rates will make home purchases more affordable and enable existing home owners to trim their monthly bills by refinancing. Just last Tuesday, Citigroup Incorporated’s Citibank unit reported applications for jumbo mortgages at its retail branches were up 30% over the previous 60 days! After the financial crisis struck, the market for jumbo loans ground to a halt. However, now home loans are a top priority and you can tell by the competitive rates banks are offering.
Wall Street Journal advises caution but also reminds readers that “prudent borrowers can use lower rates to refinance existing mortgages and cash out some of their equity, while still ending up with an affordable mortgage (WSJ)”. A single percentage drop spells big savings for borrowers-and that is good news for the housing market. It signifies a change in the housing market and the rest of us should follow suit in qualifying for new loans and refinancing loans at attractive terms.
For more information on this article visit the Wall Street Journal.