Jumbo Loans Cheaper Than Conforming Loans

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The Mortgage Bankers Assn. reported the average contract rate for a conforming loan with a 20% down payment was 4.73% last week, compared with 4.71% for a similar jumbo loan.

Jumbos are defined as mortgages over $625,500 in much of California.

The difference was more pronounced in the “hybrid” loans, popular with affluent buyers, that have a fixed rate for five, seven or 10 years before becoming adjustable.

Wells Fargo was making 30-year fixed jumbos with no upfront costs to borrowers at 4.75% on Thursday, compared with conforming loans at 5%.

For a loan with a rate fixed for the first 10 years, Wells was writing mortgages at 4.125% for jumbos compared with 4.875% for conforming loans.

The reason for the difference is that Wells Fargo has been keeping low-risk jumbo loans on its books rather than selling them as fodder for mortgage-backed securities.

Big banks are flooded to the gills with deposits that are costing them virtually nothing. Wells Fargo, for example, reported that as of the second quarter this year it was paying an average of 0.14% a year interest on its $1 trillion in deposits.

To read the full report: http://hartland.rereport.com/

 

Trends at a Glance

(Single-family Homes)

 

Aug 13

Jul 13

Aug 12

Median Price:

$   808,197

 $   840,000

 $   675,000

Average Price:

$1,010,830

 $1,052,610

 $   860,478

Home Sales:

1,035

1,052

1,026

Pending Sales:

1,306

1,284

1,577

Inventory:

1,227

1,433

1,194

Sale/List Price Ratio:

103.5%

104.7%

101.8%

Days on Market:

21

21

32

Days of Inventory:

36

41

35

The Real Estate Report provides an automatic, easy to use, property analysis feature, a mini-CMA. You can access it in the Property Analysis tab. Input your address and get a list of properties around yours that have recently sold or are currently listed for sale, all on an easy to read map.

 

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