Jumbo Loans Making Comeback

Finally, some good news on the Jumbo mortgage front.  It appears that lenders are increasing the numbers of jumbo loans made at a fairly rapid clip.  In a recent Wall Street Journal article by AnnaMaria Andriotis, it was reported that Private-market jumbo loans accounted for 15% of the total dollar amount of mortgages issued by Bank of America, up from 4% a year earlier.  At Wells Fargo, volume more than doubled during the first six months of this year over the same period last year.  Citigroup also reported increases.

In all, lenders loaned out around $38 billion in Private jumbo mortgages during the second quarter of 2012, up 65% from a year earlier.  This is the highest quarterly dollar amount since the first quarter of 2008 according to Inside Mortgage Finance. 

Jumbo financing is becoming more affordable with rates around a half a percent higher than conforming loans.  This is translating into more sales as over $1 million plus sales increased by 19% in July over the previous year.  This according to the National Association of Realtors. 

This is good news as this was the market segment showing a tepid recovery compared to the non-jumbo market.  The luxury market (not super luxury market) is typically the last to weaken and the last to recover.  This appears to be further evidence that we are in the beginnings of a residential real estate recovery.