That spread had climbed as high as 1.8 percentage points in December 2008, when the average interest rates were 5.2 percent for a 30-year, fixed-rate conforming loan and 7 percent for a jumbo mortgage.
“The spread is crazy right now. It’s so close right now,” says Randy Ernst, a vice president of mortgage lending at Guaranteed Rate. “Underwriting is still tough, but (lenders) want to do the business right now.
“It’s a risk-reward thing. You look at the client in the jumbo sector. They’re very good clients. A lot of my jumbo clients have a lot of money in the bank.”
“It’s easier than it was a year to two years ago,” agrees Eric Schuppenhauer, Chase’s head of mortgage originations.
Dr. Matthew Flak and his wife, Sarah Payne, recently decided it was time to move out of the 1,000-square-foot Chicago condo they shared with a dog and two cats, but they were unsure what kind of mortgage they could get, since Flak had a business loan tied to his dental practice.
To their delight, the couple were able to secure a jumbo loan to purchase a $657,000, 4,000-square-foot home in Orland Park, Ill., two weeks ago that required a 10 percent down payment on a 3.75 percent adjustable-rate mortgage. They plan to refinance the loan into a fixed-rate jumbo loan before the end of the year.
“I wanted to buy a home that we were going to be in for a long time,” Flak says. “It’s a little more than I wanted to spend right now, but it’s only going to get more expensive. I didn’t want to have to buy a house and then go buy another house in five to seven years. If (the rates) go up maybe 2 percentage points, maybe it’s prohibitive for us.”
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