Jumbo mortgage loans are making a comeback. The considerable disparity in mortgage rates between jumbo and conforming mortgages is rapidly diminishing as mortgage lenders are freeing up more capital by making more conforming mortgage loans salable to both Fannie Mae and Freddie Mac. In addition, because investors are being particularly cautious with their money these days as a result of the existing credit crunch, banks are finding more and more resources in their coffers, resulting in more money to lend in the non-conforming mortgage arena.

Historically, jumbo mortgage rates have always been higher than conforming mortgage rates. Because of the recent housing crisis, the gap in rates widened significantly. Now, because Fannie Mae and Freddie Mac are purchasing more loans on the secondary market, and because consumers are being noticeably more cautious by no longer risking their investments on Wall Street, Americans are putting their money into much more secure and moderate investments, such as money market or savings accounts.

The end result of this additional liquidity provided to mortgage lenders is starting to spark interest for these lenders to keep jumbo mortgages on their books. When jumbo mortgage rates reached their peak at around 8% in October 2008, jumbo mortgages became virtually obsolete. With rates in the 6% range, and some even as low as the mid-5% range, the jumbo mortgage industry is again beginning to look particularly appealing. Why wouldn’t banks want those assets on their books?

Author: Robert Hyder
Article Source: EzineArticles.com
Provided by: Canada duty tariff

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