A Sunnyvale reader commented on yesterday's post, and asked when the jumbo rates would start to conform with the interest on government backed loans. I spoke to Sue, our in-house lender this morning to get updated rates, and also to get her "take" on the question. She said that she watches the rates on mortgage backed securities daily, and monitors any change. Most individuals use changes in the 10 year bond to predict changes in loan rates, but these securities are the true indicator, and this information is available only to lenders who pay for this service.
So-called jumbo loans have always been a percent or more higher than conventional ones, and even though the difference is currently 6 5/8% versus just under 5%, that rate is still pretty reasonable if you look back at the history of the home loan market.
A second question in the comment was if I knew when the "jumbo conforming" rate for this area might return to $729,000 now that it has reverted to $625,500 (by the way, the rate between $417,000 and $625,500 is now 5 3/8%. The National Realtors Association will be pressing for this change with the new administration, but Washington will probably concentrate on the lower end market first.
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