Jumbo rates in the 4-5% range still look attractive to me – from cnbc.com:
The deadline for ending temporarily higher loan limits at Fannie Mae, Freddie Mac and the FHA is October 1st, but they are effectively ended now.
A Wells Fargo spokesman confirms, “August 15th was the deadline for applications and rate locks for FHA and conventional conforming loans with balances above the limits we expect will be in place after September 30th.”
The loan limits were raised by Congress in 2008 temporarily from $417,000 to $729,000 in the highest priced markets in order to help bring much-needed liquidity to the mortgage market after the sub-prime meltdown that sent investors fleeing. There has been heavy lobbying by the Realtors, mortgage bankers and home builders to extend the limits, but so far to no avail.
Even though the rule goes into effect on October 1st, all loans have to be funded, sold and shipped to the GSE’s by then. Refi volume has been so high lately that it can take 45 days to do a loan, so lenders have to cut off in time.
What does that mean on the street? A check of Wells Fargo’s website shows it offering the 30-yr fixed conforming at 4.25 percent, and jumbos at 4.625 percent. Obviously the rate changes will affect only the highest priced markets, largely on the coasts.
….closing the barn doors after the horse got it. Well, better late than never I suppose.
Damn straight. Can’t get to normal if you don’t let things “normalize”.
That said… $417K is still to high; it represents a bubble-inflated value under the original formula.
However we got here, we’re here.
As long as we’re buying paper, I’m with Rob Dawg – why have any limits?
As a taxpayer and thus a shareholder of Fannie/Freddie, I’d much rather take my chances with rich people, than those who could get thrown in the ditch over an unexpected extra expense – which happens a lot with homeownership.
Fannie/Freddie new SD limits would be $546,250, but we know that it takes at least $400,000, and if you’re coastal more like $500,000 minimum to buy a quality home around here – which typically means homeowners need to make $6,000 per month gross income with 20% down. You and I know that really means a net of $4,000/month for housing, utilities, food and a couple of goodies.
Need a new roof? $10,000 – $15,000.
Vacation? Fuggetaboutit.
Another kid or two? Could cost you your house.
Rich people have more horsepower, and can take a punch.
I’ll add that this equation is why the under-$400,000 market is so hot right now in areas where that’ll get you a decent home in a good area in SD County. But look how long that segment has been hot – 2+ years, yet no squish-up in pricing. We’re still in the market-clearing phase.