Fannie and Freddie Helping Out the Jumbos

It’s been a few months since February, when Congress approved the temporary rise in the limits of the mortgages Fannie and Freddie could buy. Jumbo loans, which was once defined as anything above $417,000 is now capped at $729,750 (just until the end of 2008). Overall goal to lower jumbo interest rates, and bring relief to those expensive housing areas where the median home price is well over half or even three quarters of a million dollars. In this case, these words of Congress didn’t translate to much action as jumbo rates continue to be expensive relative to their “conforming” peers - sometimes one to one and a half percentages points so.
However, this past week, the Wall Street Journal reported that Fannie and Freddie have gotten on their game face and have been more aggressively purchasing these jumbo loans which have helped bring these interest rate spreads down.
A quick rate check on Bankrate for the San Rafael-Novato area indicates that with 20% down, the rates on a $417,000 or a $729,750 loan are quite similar. Looks like it’s working in these parts! For a 30 year fixed at either of those amounts, Countrywide is quoting 6.125% and no points.
Since this cap is set to expire at the end of this year (the article notes that Congress is trying to permanently reset the cap to at least $550,000), this may spur some more buying activity in the bay from those who’ve been sitting on the sidelines these past few years.

Cheers,

Mark

Your Silicon Valley & Sunnyvale Real Estate Professional
Mark Thomason
http://www.thomasonteam.com/
408.850.3085