Another Sign of Economic Recovery: Jumbo Mortgage Interest Rates Become More Affordable

If you are attempting to purchase a house worth more than $729,500, you will need what’s called a “jumbo loan.” Jumbo loans are not backed by Freddie Mac or Fannie Mae, and as a result, the interest rates on these loans are typically higher since the lender takes a greater risk on the loan by keeping the mortgage on its own books.

After the inception of the recent financial crisis, jumbo loans were nearly impossible to get as lenders flocked to the safety of government-backed garden-variety home loans. As The Wall Street Journal notes, this crippled the market for higher-end homes. Even today, many people are still having trouble getting jumbo mortgage loans because banks are not lending against property like they did three years ago.

However, when jumbo loan interest rates decline, it’s not only good news for new home buyers; people are also able to refinance their existing jumbo loans at the new lower interest rates to save them thousands of dollars---which can sometimes save a thousand dollars or more in monthly payments. Those savings are often invested back into the economy in the form of discretionary spending: a very important part of a healthy economy.

MSNBC reports the average rate for a 30-year fixed rate jumbo loan was only 5.48% last week, which is one of the lowest rates recorded in surveys. Diamond Funding is currently offering a 15-year fixed jumbo loan at 4.510% APY.

For the best information on mortgage rates, click here.