I don’t see this as unreasonable or a sign of a bubble. Middle class people can get down payments of with 3% FHA loans and 5% with conforming loans. What’s wrong with the lower rich putting down 15% instead of 20%?
In fact, these are likely lower risk loans than the FHA 3% down loans. Foreclosure costs as a percentage of the loan will be much lower for high-end properties in the event of default. And when the market turned down last time, the 1-3 million range suffered the least. Small condos in City Heights? down 60%. Single families in La Jolla? Maybe 30%.
Another thing is that with rising prices, more and more homes now require jumbo mortgages. Without this sort of policy, standards would automatically get tighter each year. The extended conforming loan limit seems to go up much less each year than actual prices. Chase didn’t become the largest bank in the USA by being stupid, like, say WaMu.
