Reports indicate that the interest rate for jumbo loans, which includes loans greater than $421,100, dropped five basis points last week, averaging 3.99 percent for the week. That is now 13 basis points lower than the conforming rate, which is the largest spread between jumbo rates and the conforming rate since March 2016, according to the Mortgage Bankers Association (MBA).
“A strong appetite for jumbo loans and a highly competitive jumbo market has led to increased availability and lower pricing,” says Joel Kan, a Mortgage Bankers Association economist. Sales on the higher end of the residential real estate market are increasing, which in turn also explains the stronger demand for jumbo loans recently.
Meanwhile, insufficient levels of inventory with regard to homes for sale on the lower end are keeping applications down, according to the MBA. Total mortgage application activity – for both homeowners who are looking to refinance and those who are looking to make home purchases –decreased by 0.5 percent week over week on a seasonally adjusted basis, the MBA reported.
This marks the second consecutive week that applications have stayed in place for the most part.
Applications from homeowners looking to refinance last week showed a slight 0.3 percent increase from the previous week, but remain 38 percent lower than the same week a year ago, when rates were lower. Mortgage applications to purchase a home dropped by two percent for the week. Still, purchase applications are 9 percent higher than the same week one year ago, the MBA reports.
The 30-year fixed-rate mortgage averaged 4.12 percent last week, the lowest rate since last November.