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Home › Forums › Housing › Why are Jumbo loan rates (aka. california loan rates) sky-rocketing

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  • August 8, 2007 at 8:50 AM #9767
    Alex_angel
    Participant

    Jumbo loans or as I like to call them California home loan rates sky rocketing? With a crappy market, this is going to kill real estate in California. What gives?

    August 8, 2007 at 9:38 AM #71727
    bsrsharma
    Participant

    They can’t sell Jumbos to Government Sponsered Enterprises (GSEs – Federal National Mortgage Association – FNMA – Fannie Mae and Federal Home Loan and Mortgage Corporation (Freddie Mac)). With no demand in secondary market for these loan, all mortagage issuers will quickly run out of funds. Mortgage issuers act as circulating pumps converting mortgages to investment securities. Since there are no buyers for these securities (due to fear of defaults/devaluation due to home price deflation), there are no Jumbo loans.

    You are just seeing almost all market for $500K and above properties go up in a flash. This is going to be a bigger deal than subprimes. Now, all homes except the multimillion $ wealthiest estates are valued @ about $500K due to the magic of mortgage availability.

    August 8, 2007 at 9:38 AM #71843
    bsrsharma
    Participant

    They can’t sell Jumbos to Government Sponsered Enterprises (GSEs – Federal National Mortgage Association – FNMA – Fannie Mae and Federal Home Loan and Mortgage Corporation (Freddie Mac)). With no demand in secondary market for these loan, all mortagage issuers will quickly run out of funds. Mortgage issuers act as circulating pumps converting mortgages to investment securities. Since there are no buyers for these securities (due to fear of defaults/devaluation due to home price deflation), there are no Jumbo loans.

    You are just seeing almost all market for $500K and above properties go up in a flash. This is going to be a bigger deal than subprimes. Now, all homes except the multimillion $ wealthiest estates are valued @ about $500K due to the magic of mortgage availability.

    August 8, 2007 at 9:38 AM #71851
    bsrsharma
    Participant

    They can’t sell Jumbos to Government Sponsered Enterprises (GSEs – Federal National Mortgage Association – FNMA – Fannie Mae and Federal Home Loan and Mortgage Corporation (Freddie Mac)). With no demand in secondary market for these loan, all mortagage issuers will quickly run out of funds. Mortgage issuers act as circulating pumps converting mortgages to investment securities. Since there are no buyers for these securities (due to fear of defaults/devaluation due to home price deflation), there are no Jumbo loans.

    You are just seeing almost all market for $500K and above properties go up in a flash. This is going to be a bigger deal than subprimes. Now, all homes except the multimillion $ wealthiest estates are valued @ about $500K due to the magic of mortgage availability.

    August 8, 2007 at 9:46 AM #71730
    no_such_reality
    Participant

    It’s simple, too many people haven’t been good for the money.

    So, given the so many people aren’t good for the money, rates have to be that much higher to provide the risk adjusted return needed to buy the mortgage instead of just buying a treasury bond.

    August 8, 2007 at 9:46 AM #71846
    no_such_reality
    Participant

    It’s simple, too many people haven’t been good for the money.

    So, given the so many people aren’t good for the money, rates have to be that much higher to provide the risk adjusted return needed to buy the mortgage instead of just buying a treasury bond.

    August 8, 2007 at 9:46 AM #71854
    no_such_reality
    Participant

    It’s simple, too many people haven’t been good for the money.

    So, given the so many people aren’t good for the money, rates have to be that much higher to provide the risk adjusted return needed to buy the mortgage instead of just buying a treasury bond.

    August 8, 2007 at 9:47 AM #71737
    bob007
    Participant

    can anyone provide a link to this change in regulation ?

    thanks in advance

    August 8, 2007 at 9:47 AM #71852
    bob007
    Participant

    can anyone provide a link to this change in regulation ?

    thanks in advance

    August 8, 2007 at 9:47 AM #71860
    bob007
    Participant

    can anyone provide a link to this change in regulation ?

    thanks in advance

    August 8, 2007 at 9:50 AM #71740
    guitar187
    Participant

    It is not a change in regulation.

    August 8, 2007 at 9:50 AM #71855
    guitar187
    Participant

    It is not a change in regulation.

    August 8, 2007 at 9:50 AM #71863
    guitar187
    Participant

    It is not a change in regulation.

    August 8, 2007 at 9:51 AM #71743
    HLS
    Participant

    It’s not a “regulation” It’s simply market conditions.

    See the Forum Topic
    “Help understanding the $417K limit on home loans”
    off to the right.

    THIS website will keep you informed.

    August 8, 2007 at 9:51 AM #71858
    HLS
    Participant

    It’s not a “regulation” It’s simply market conditions.

    See the Forum Topic
    “Help understanding the $417K limit on home loans”
    off to the right.

    THIS website will keep you informed.

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