Mumbo jumbo: Why are mortgage rates all over the place?

“I’ve seen a quarter- to a half-percentage-point range for exactly the same borrower.”

TRD NATIONAL /
Aug.August 21, 2020 09:30 AM
Since the pandemic started, there is a much smaller pool of lenders willing to offer jumbo loans (iStock)

Since the pandemic started, there is a much smaller pool of lenders willing to offer jumbo loans (iStock)

Jumbo loans, typically seen as lower risk investments by banks, are seeing rates vary widely among lenders.

The mortgages, used to finance properties that are too big to be sold to Fannie Mae or Freddie Mac, usually fall within a 10th of a percentage point of each other. But since the pandemic started, there is a much smaller pool of lenders willing to offer jumbo loans, according to the Wall Street Journal.

“I’ve seen a quarter- to a half-percentage-point range for exactly the same borrower,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, told the publication.

Another mortgage broker, Anthony Bird, said that he saw 3.25 percent rate and a 5 percent rate.

The variance is thanks to the fact that securitization and correspondent channels — the latter referring to banks that would buy loans from other lenders — have not seen much activity since markets were hit by the coronavirus pandemic in March.

Fixed mortgage rates, on the other hand, have seen record lows, despite uncertainty in the market overall. However, some lenders, namely Fannie Mae and Freddie Mac, are bumping rates up for certain loans.

In July, jumbo rates exceeded that of traditional mortgages for the first time in five years. Last week, the average rate for a jumbo loan was 3.41 percent compared to 3.13 percent on a 30-year fixed-rate mortgage, according to the Mortgage Bankers Association’s weekly survey, which covers 75 percent of the residential mortgage market. [WSJ] — Sasha Jones


Related Articles

arrow_forward_ios
Secretary of the Treasury Steven Mnuchin and Administrator of the Small Business Administration Jovita Carranza (Getty; iStock)

PPP loan forgiveness to begin within the coming week: SBA

PPP loan forgiveness to begin within the coming week: SBA
(iStock)

ACLU accuses Missouri courts of violating federal eviction ban

ACLU accuses Missouri courts of violating federal eviction ban
Mallspats: Unibail-Rodamco sues LA County over retail closures

Mallspats: Unibail-Rodamco sues LA County over retail closures

Mallspats: Unibail-Rodamco sues LA County over retail closures
(iStock)

Mortgage applications drop despite posting annual growth

Mortgage applications drop despite posting annual growth
(Getty)

“On the verge of a tragedy:” The stark numbers of a pandemic-hit NYC

“On the verge of a tragedy:” The stark numbers of a pandemic-hit NYC
The pandemic is leading to huge losses in value for hotels, malls and other commercial properties (iStock)

Troubled commercial properties see values fall 27%: report

Troubled commercial properties see values fall 27%: report
Landlord groups say limits on what landlords can be reimbursed for renovations has caused vacancy to rise. (Illustration by The Real Deal)

From unthinkable to reality: Cheap NYC apartments sit vacant

From unthinkable to reality: Cheap NYC apartments sit vacant
(iStock)

With eviction moratorium set to expire, landlord-backed group raised more funds to help renters

With eviction moratorium set to expire, landlord-backed group raised more funds to help renters
arrow_forward_ios

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

Loading...