New Jumbo conforming rates

[equalizer]

Looks like the coast will only go up 5% from this news instead of the 10% I predicted. Bet NO one except insiders expected that we would have three rates structures, conforming, conforming jumbo and jumbo.

http://online.wsj.com/article/SB120839080312121351.html

"Based on the current pricing plans, interest rates on conforming jumbo loans are likely to be around 0.50 to 0.75 percentage point above those on loans of $417,000 and below, said Bob Ryan, vice president of mortgage-credit pricing at Freddie. But the conforming jumbo rates should be around 0.50 point below those on mortgages that exceed the new caps, he said.

HSH Associates, a financial publisher in Pompton Plains, N.J., said its surveys of lenders last week showed an average rate of about 5.9% on loans of $417,000 and below that can be sold to Fannie and Freddie, compared with an average of about 7.2% on loans too large for them to buy. Fannie and Freddie are imposing numerous restrictions on conforming jumbo loans. For instance, Freddie won't buy such loans in cases where the borrower's mortgage debt exceeds 90% of the home's appraised value, or 85% in areas where house prices are falling. Freddie also says borrowers must fully document their income and assets."

[Alex_angel]

Wow. What a bunch of freaking crooks creating a new loan category. So much for rasing the limit from $417

[Alex_angel]

Wow. What a bunch of freaking crooks creating a new loan category. So much for rasing the limit from $417

[Alex_angel]

Wow. What a bunch of freaking crooks creating a new loan category. So much for rasing the limit from $417

[Alex_angel]

Wow. What a bunch of freaking crooks creating a new loan category. So much for rasing the limit from $417

[Alex_angel]

Wow. What a bunch of freaking crooks creating a new loan category. So much for rasing the limit from $417

[Daniel]

That was fully expected. From an MBS trader point of view, large loans behave quite differently from small loans (they have different prepayment characteristics), so the bids in the secondary market reflect that. Therefore, one ends up with 3 categories of MBS:

– under $417K: no credit risk (covered by GSEs), low prepayment risk

– between $417K and $730K: no credit risk (still covered by GSEs), but high prepayment risk

– above $730K: both credit risk and prepayment risk

Prices (and, therefore, rates) simply reflect this reality.

[Daniel]

That was fully expected. From an MBS trader point of view, large loans behave quite differently from small loans (they have different prepayment characteristics), so the bids in the secondary market reflect that. Therefore, one ends up with 3 categories of MBS:

– under $417K: no credit risk (covered by GSEs), low prepayment risk

– between $417K and $730K: no credit risk (still covered by GSEs), but high prepayment risk

– above $730K: both credit risk and prepayment risk

Prices (and, therefore, rates) simply reflect this reality.

[Daniel]

That was fully expected. From an MBS trader point of view, large loans behave quite differently from small loans (they have different prepayment characteristics), so the bids in the secondary market reflect that. Therefore, one ends up with 3 categories of MBS:

– under $417K: no credit risk (covered by GSEs), low prepayment risk

– between $417K and $730K: no credit risk (still covered by GSEs), but high prepayment risk

– above $730K: both credit risk and prepayment risk

Prices (and, therefore, rates) simply reflect this reality.

[Daniel]

That was fully expected. From an MBS trader point of view, large loans behave quite differently from small loans (they have different prepayment characteristics), so the bids in the secondary market reflect that. Therefore, one ends up with 3 categories of MBS:

– under $417K: no credit risk (covered by GSEs), low prepayment risk

– between $417K and $730K: no credit risk (still covered by GSEs), but high prepayment risk

– above $730K: both credit risk and prepayment risk

Prices (and, therefore, rates) simply reflect this reality.

[Daniel]

That was fully expected. From an MBS trader point of view, large loans behave quite differently from small loans (they have different prepayment characteristics), so the bids in the secondary market reflect that. Therefore, one ends up with 3 categories of MBS:

– under $417K: no credit risk (covered by GSEs), low prepayment risk

– between $417K and $730K: no credit risk (still covered by GSEs), but high prepayment risk

– above $730K: both credit risk and prepayment risk

Prices (and, therefore, rates) simply reflect this reality.

[NotCranky]

Daniel,
You seem like the man to ask a question I have.

Relative to other factors how much does simple supply and demand affect mortgage rates? We have recession and very little buying. Most conservative people who have mortgages are locked into pretty good terms. On the other hand there is supposedly a credit crunch which may just be more of what davelj(pigg regular) called a ” shitty asset crisis” or something like that.

The idea kind of floats around here that rates going up will drive prices down further I am wondering if demand for mortgage money as houses fall and when the economic outlook improves doesn’t have a counter effect to that notion in a relative way of course, dependent on other variables perhaps?

[NotCranky]

Daniel,
You seem like the man to ask a question I have.

Relative to other factors how much does simple supply and demand affect mortgage rates? We have recession and very little buying. Most conservative people who have mortgages are locked into pretty good terms. On the other hand there is supposedly a credit crunch which may just be more of what davelj(pigg regular) called a ” shitty asset crisis” or something like that.

The idea kind of floats around here that rates going up will drive prices down further I am wondering if demand for mortgage money as houses fall and when the economic outlook improves doesn’t have a counter effect to that notion in a relative way of course, dependent on other variables perhaps?

[NotCranky]

Daniel,
You seem like the man to ask a question I have.

Relative to other factors how much does simple supply and demand affect mortgage rates? We have recession and very little buying. Most conservative people who have mortgages are locked into pretty good terms. On the other hand there is supposedly a credit crunch which may just be more of what davelj(pigg regular) called a ” shitty asset crisis” or something like that.

The idea kind of floats around here that rates going up will drive prices down further I am wondering if demand for mortgage money as houses fall and when the economic outlook improves doesn’t have a counter effect to that notion in a relative way of course, dependent on other variables perhaps?

[NotCranky]

Daniel,
You seem like the man to ask a question I have.

Relative to other factors how much does simple supply and demand affect mortgage rates? We have recession and very little buying. Most conservative people who have mortgages are locked into pretty good terms. On the other hand there is supposedly a credit crunch which may just be more of what davelj(pigg regular) called a ” shitty asset crisis” or something like that.

The idea kind of floats around here that rates going up will drive prices down further I am wondering if demand for mortgage money as houses fall and when the economic outlook improves doesn’t have a counter effect to that notion in a relative way of course, dependent on other variables perhaps?

[Author]

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