From the New York website: 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