Rock-bottom jumbo loan rates get buyers to borrow more

Homebuyers are finding jumbo mortgages cheaper than traditional ones — something that has never happened before — and are taking advantage of the better rates by borrowing more.

The average 30-year fixed-rate jumbo mortgage stood at 4.71 percent last week, compared with 4.73 percent for the average 30-year fixed-rate conforming mortgage, according to the Mortgage Bankers Association.

“In my 30-year career, I’ve never seen nonconforming loans priced below conforming loans,” Brad Blackwell, executive vice president at Wells Fargo WFC +0.27% Home Mortgage, told the Wall Street Journal.

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The better rates on jumbo mortgages are changing the strategy of lenders as well as homebuyers.

“I’ve had situations where I’ve told clients, ‘You don’t need to borrow within the [conforming] limit. I can get you a lower rate if you borrow a little more,’ ” Rolan Shnayder, director of new-development lending at H.O.M.E. Mortgage Bankers in New York, told the newspaper. [WSJ]  – Hiten Samtani