Stock market dip may make jumbo loans even more attractive

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

TRD 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
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Budapest (Credit: Pixabay)

This European city has the world’s fastest rising home price

(Credit: iStock, Wikipedia)

CBRE to open first Northeast co-working location in Philadelphia

Crown Prince Sheikh Mohammed bin Zayed Al Nahyan of Abu Dhabi, Softbank CEO Masayoshi Son, and former British Prime Minister Tony Blair (Credit: Getty Images)

Masa Son, the crown prince of Dubai and Tony Blair walk into a bar and decide to build a $34B city in Asia

State Senator Julia Salazar and Assemblymember Harvey Epstein (Credit: Getty Images)

Pols take aim at private equity with new plan to tax mezz debt

Treasury Department watchdog is investigating the Opportunity Zone program (Credit: iStock)

Opportunity Zone investigation won’t derail developer investment, experts say

arrow_forward_ios
Loading...