Stock market dip may make jumbo loans even more attractive

Rates could remain below 4%, a boon to some borrowers

New York /
Jan.January 29, 2016 01:11 PM

The jumbo-mortgage market will likely keep its mojo in 2016 after it reached new highs last year — not even recent turbulence in global stocks can slow it down, according to industry experts.

In fact, the current dip in the global market may hold interest rates for jumbo mortgages — loans above $417,000 or more, depending on the area — below four percent for a while longer, an attractive proposition for borrowers seeking a safer investment in real estate.

The volume of mortgage loans reached an estimated $320 billion nationally in 2015, the highest market share since 2002 and a slight increase from 2014, when jumbo mortgages comprised 18 percent of the lending market, Guy Cecala, CEO and publisher of Inside Mortgage Finance, told the Wall Street Journal.

The Federal Reserve isn’t likely to raise short-term rates in the spring, said Keith Gumbinger, vice president of mortgage-rate website HSH.com. Gumbinger told the Journal that interest will probably stay below four percent due to stock market volatility.

If the central bank does raise short-term rates, it would be no more than two to three times this year, said Gumbinger. This would keep the average 30-year, fixed-rate jumbo loan around a little less than five percent. Currently, the rate is 3.875 percent. Five-year, adjustable-rate mortgages may hit four percent, he said.

Often in a down stock market, people shift assets to real estate as a safer investment, although the downturn may mean less available cash for buyers seeking to purchase expensive homes, Cecala said.

A flux in rates coupled with fear of rising home prices could stimulate home buying and current borrowers with adjustable-rate mortgages may rush to refinance. [WSJ]Dusica Sue Malesevic


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
MLB teams agree to pay for some minor leaguers’ housing
MLB teams agree to pay for some minor leaguers’ housing
MLB teams agree to pay for some minor leaguers’ housing
Donal O’Sullivan (Image via Navillus)
Ex-Navillus CEO found guilty of cheating unions
Ex-Navillus CEO found guilty of cheating unions
5 perfect new development homes for you and your dog (or cat)
5 perfect new development homes for you and your dog (or cat)
5 perfect new development homes for you and your dog (or cat)
From left: Francisco Llado, Gil Dezer, Amir Korangy, Paulo Bacchi, Edgardo Defortuna, Jay Parker, Daniel de la Vega (Artefacto, Getty)
Is Miami’s residential architecture overplayed? No way!: TRD panel at Artefacto
Is Miami’s residential architecture overplayed? No way!: TRD panel at Artefacto
George Gleason (Bank OZK)
Bank OZK loan originations reach highest level since 2017
Bank OZK loan originations reach highest level since 2017
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...