We'll consider the experiment of addressing social issues by saying oops and ouch, and what's the bonus from hosting the basketball finals in the Valley.
Banks Renew Interest In Jumbo Loan Market
The market for luxury home loans is waking up. Banks had been wary of lending big money as the market recovered from an historic recession, but now they have started loosening the purse strings.
Sales of homes costing over $500,000 in the Phoenix market are up 64 percent compared to last year around this time, according to research from the W.P. Carey School of Business at Arizona State University, and that demand is driven, in part, because it is easier to get financing for a so-called jumbo loan, said Guaranteed Rate’s Mike Metz.
“For the first time in my 25-year career, I’ve seen jumbo rates dip below the conforming 30-year fixed rate,” said Metz, the branch manager of the mortgage lender’s Scottsdale branch.
Mortgage experts call this an oddity. Conforming loans, ones below $417,000, have historically been a much better deal, but these days, fees tacked on by Fannie Mae and Freddie Mac have made conforming loans less attractive, even if rates overall are still relatively low.
Mike Fratantoni, of the Mortgage Bankers Association, said another reason jumbo loans are getting more competitive is that banks have a lot of cash. They want to lend it to people with good credit.
“These tend to be borrowers with higher income, more stable employment,” Fratantoni said. “A lot of aspects make those loans very attractive so there’s been a bidding war to get those jumbo loans.”
Fratantoni said jumbo loans make up a sliver of the national market, but they represent the industry’s fastest-growing sector. In turn, private investors are starting to buy these loans from the banks again, which “just adds to the banks’ desire” to make them, he added.
Securitizing loans on the secondary market is what brought the country to its knees during the housing crisis when bundles of bad mortgages soured. A spokesman for Redwood Trust, an investor that expects to nearly quadruple its stake in jumbo securities to about $8 billion in 2013, said the loans his company sells are AAA-rated.
“We have been lucky to increase activity over the past year, but overall, it’s just barely on the radar,” said Mike McMahon, Redwood Trust’s managing director.