WASHINGTON – Nov. 14, 2013 – In an unusual move, jumbo mortgages are becoming a bigger bargain over conforming loans.
Lenders are offering jumbo mortgages at lower rates – more than a quarter of a percentage point – than conforming loans backed by Fannie Mae and Freddie Mac.
“The government-run agencies require conforming loans to be below $417,000, unless they are for homes in high-cost areas like New York or Los Angeles, where the limit is $625,500,” CNNMoney reports.
Generally, banks charge higher rates on jumbo mortgages, typically about a quarter of a percentage point more than conforming loans, according to the Mortgage Bankers Association. But recently that has reversed.
For example, Wells Fargo is offering a 30-year jumbo mortgage rate this week at 4.125 percent. In comparison, it’s offering a 30-year fixed-rate conforming mortgage at 4.5 percent. US Bank is offering a jumbo mortgage rate for 3.875 percent compared with 4.25 percent for a conforming loan.
“Never in my memory have jumbos been such a bargain,” says Peter Grabel, a loan officer at Luxury Mortgage Corp. in Stamford, Ct..
Source: “Rich people are getting mortgages cheaper than you,” CNNMoney (Nov. 12, 2013)