The link above from The Great Loan Blog, provides excellent insight about today's lack of jumbo conventional mortgage availability.
The chart below describes the monthly trend of the proportion of jumbo purchase mortgages relative to all conventional purchase mortgages since 2004.
Notice that the percentage of jumbos drops stepwise after December in years 2004 and 2005. The reason for these sudden drops for jumbos was that conforming loan limits on single family residences were increased in the following month. Conforming loan limits were increased in January 2005 from $333,700 to $359,650. Conforming loan limits were increased again in January 2006 to $417,000. This enabled $conforming mortgages to meet the demands for high priced home purchases. The irrational exuberance of home price increases in 2005 and 2006 eat away the purchasing power of conforming loans. The result created greater demand for the jumbo mortgages in 2005 and 2006. In 2007 there was no increase in the conforming loan limit, which is why you do not see the typical stepwise decrease in proportion of conventional mortgages that are jumbo. Also housing demand was slowing down by early 2007. By June - July 2007 the chart shows a mid year sudden drop in proportions of jumbo mortgages. This reflects the meltdowns in the secondary mortgage markets for these products. Investors lost interest in jumbo mortgages. That lack of a secondary market for jumbo mortgages persist to the present day.
If you are a mortgage originator, please feel free to post your product descriptions of jumbo level mortgage financing and the terms. Alternatively you can send your product availability to us by email to mortgageinfo@cbmiweb.com. Thanks!
2 comments:
Great post.I like the content of this post.
Jumbo mortgages are loans used to buy homes that are expensive enough to require exceptionally large mortgages.
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