Mortgage Rates on Jumbos Leap

The current credit crunch has hit the jumbo loan market. Lenders are raising rates on jumbo loans, those for more than $417,000, by a full point, or more.

Jumbo loans are now a point and a half above conforming loans. That's way up from the traditional premium spread of about a half to three-quarters of a point.

Blame it on Wall Street which has stopped buying the loans, even those with AAA ratings. The lenders hope with the higher premium, Wall Street will start buying again. We hope this is only a temporary blip.

The median price for single-family, re-sale homes in San Diego County fell 4.2% in July from the month before, and was down 1.7% year-over-year. The average price was down 1.8%, but managed to be up 2% over last July.

Home sales fell 13.6% from the month before, off 13.6% compared to last July. Year-to-date, home sales are down 14.8%.

The median price for condos dropped 3.8%. Condo sales were off 6.5% month-over-month, and down 16.2% year-over-year.

The sales price to list price for single-family homes fell 0.1 of a point to 95.2%. The ratio for condos rose 0.2 of a point to 96.4%.

My advice? For buyers, the rise in mortgage rates for jumbo loans, which are needed for most all sales in the County, will reduce your buying power. The thing to do is to look for lenders who keep their loans in-house and don't bundle them up and sell them on Wall Street.

For sellers, the pool of buyers in the low-end of the market have already been hit by tightened underwriting standards, now, the mid and upper-end of the market have been hit by rising mortgage rates. The pool of potential buyers has shrunk again. If you have to sell, you need to be very aggressive.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or for an evaluation of your home's worth, call me.