While rates for conventional mortgages saw their greatest spike in two decades last month, financing costs for high-end homes are becoming a relative bargain, as banks such as Wells Fargo and JPMorgan Chase offer jumbo mortgages at low rates to nab high-end clients, Bloomberg News reported.
The extra cost of 30-year fixed jumbo loans reached a six-year low of 0.16 percentage point last month, according to data from HSH.com reviewed by Bloomberg News. Bigger adjustable-rate mortgages with payments that can rise after five years ended last week 0.09 percentage point cheaper.
“Lately, our jumbos are either in line with conforming or better,” Karen Mayfield, the mortgage banking national sales manager at San Francisco-based Bank of the West, told Bloomberg News.
Jumbo loans – which are loans larger than those allowed in government-supported programs (up to $729,750 for single-family properties in high-cost areas such as New York) – are getting relatively cheaper because they remain on the bank’s book, as opposed to being spun off into mortgage-backed securities, Paul Miller, a capital markets analyst, told Bloomberg News.
“The banks are awash in liquidity, and they are looking for ways to make good loans,” David Hilder, an analyst at New York-based Drexel Hamilton, told Bloomberg News. [Bloomberg News] – Hiten Samtani