Jumbo Rates Still Very Strong

We’ve talked a lot about how interest rates are going up. January of this year was definitely a tough one for interest rates. Conventional rates went up three quarters of a point in the first month. The increases have settled down at this point, but we’re trending at a higher band.

Jumbo vs. Conventional Interest Rates

One noteworthy thing is that even though jumbo rates are also a little higher, they haven’t proportionately increased. Conventional loans are driven by mortgage-backed securities. If those go down, then it drives the yield up – and yield equals rates.

If you are doing conventional, FHA, or VA loans, they are completely secondary market driven. On the other hand, jumbo loans are a little different. They also fluctuate with the bond markets, but they aren’t as reliant on those markets.

While we are seeing conventional loans up by three quarters of a percent, jumbo loans are up by only a quarter of a percent. I even priced out one loan last week that still had a 2 as the first number.

Do You Need a Jumbo Loan?

It’s good to have a refresher on jumbo loans vs. conventional loans. Nationwide, the conventional loan limit is $647,200. Beyond that, there are conventional high balance loans, which also falls in conventional lending – but for areas like Orange County, San Diego, LA, etc. Those are high-balance areas. Any amounts over the local limits become a true jumbo loan.

The nice thing is that we have jumbo lenders that kick in over the $647,200 limit, which really isn’t a lot lately. I locked in a few jumbo loans this week in the low-3% range instead of the high-3% range for conventional loans.

There are a lot of talk about rates going up. If you know anyone who is considering a jumbo loan, then you might be able to get better rates. I wanted to share this tip, especially for people living in Southern California since jumbo loans are in play so much. Contact me any time so we can price it out and help you explore the options.