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.”

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
Hammerson CEO Rita-Rose Gagne and Brookfield's Bruce Flatt. (Hammerson, Brookfield, Getty)
Brookfield’s US malls are struggling. Now it’s buying some in Europe
Brookfield’s US malls are struggling. Now it’s buying some in Europe
(iStock)
Homebuilder sentiment ticks up in April
Homebuilder sentiment ticks up in April
(iStock)
Mortgage requests, refinancings continue to drop
Mortgage requests, refinancings continue to drop
Sao Carlos CFO Fabio Itikawa. (Getty, YouTube via Levante Investimentos)
In pandemic-battered Brazil, 3G Capital founders hunt for real estate deals
In pandemic-battered Brazil, 3G Capital founders hunt for real estate deals
Better CEO Vishal Garg and SoftBank CEO Masayoshi Son (Better.com, Getty)
Better.com lands $500M investment from SoftBank
Better.com lands $500M investment from SoftBank
An index tracking applications for mortgages to purchase homes decreased 5 percent. (iStock)
Frenzy ending? Mortgage requests fall 5%
Frenzy ending? Mortgage requests fall 5%
(iStock/Illustration by Kevin Rebong for The Real Deal)
March madness: Homes sold faster than ever last month
March madness: Homes sold faster than ever last month
February were 10.4 percent higher than last year. (iStock)
Home price growth hits 15-year high
Home price growth hits 15-year high
arrow_forward_ios

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

Loading...