Freddie Mac asks lenders each week about the terms they are offering to people with good credit, enough income to cover payments and 20 percent down payments. The borrowers in the latest survey would have paid lenders an average of 0.7 percent in upfront discount points and fees to obtain the quoted rates.
The improving economy also has contributed to another trend — heavy competition among lenders to make jumbo mortgages. The outsize loans, too big to be backed by Freddie Mac or its sister finance company, Fannie Mae, are written mainly for affluent residents of the East and West coasts, where home prices have risen rapidly in the past year.
The Mortgage Bankers Association says jumbo loan rates are now lower than those for smaller, so-called conforming mortgages that can be sold to or guaranteed by Freddie and Fannie.
Fannie and Freddie guidelines cap conforming loans at $417,000, with higher limits in areas where home prices are high.
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