Jumbo Mortgage Rates Becoming Affordable

San Francisco Chronicle (05/13/08); Pender, Kathleen
San Rafael, Calif.-based RPM Mortgage reports a drop in the 30-year fixed jumbo-conforming mortgage rate to 6.125 percent on May 12, when standard 30-year fixed mortgage rates and regular jumbo loan rates averaged 5.875 percent and 6.75 percent, respectively. Experts attribute the 0.5-percentage-point decline in jumbo-conforming rates to a recent announcement from House Financial Services Committee Chairman Barney Frank, D-Mass., about planned hearings to examine why the temporary boost in the conforming-loan limit to a maximum of $729,750 in high-cost housing markets has not triggered more lending activity. Rates remained high because investors were wary of securities backed by jumbo-conforming loans, but activity picked up when Fannie Mae said it would pay the same price for both jumbo-conforming and standard conforming loans. Given that first-time buyers have a difficult time saving enough money to make a 10-percent to 15-percent down payment, experts say most jumbo-conforming borrowers are those with sufficient home equity and a need to refinance out of a standard jumbo mortgage.