Mortgage interest rates are trending steadily downward. The research firm HSH reports that jumbo loans—those for higher-priced homes—dipped below 6% for the first time since September of 2005. This week the average for a 30-year jumbo loan is 5.96%.
The news comes along with mixed signals for the high-end home market. The Wall Street Journal reported today that more high-end homeowners are being foreclosed on. The top tier of homes now account for 30% of foreclosed homes, up from 16% three years ago, according to Zillow.com
Despite the lower rates, a lot of buyers are having trouble getting qualified for larger loans. According to real estate agents, lenders are denying loans because the homes aren’t appraising for the prices that sellers want to sell and buyers are willing to pay. Appraisers have been getting tougher about their standards. In some cases there aren’t enough comparable sales to paint an accurate picture for an appraisal. “The luxury segment is seeing a lot of appraisal problems,” says Las Vegas Realtor Rob Jenson.
Still, the blended rate on all 30-year loans, jumbo and conforming, has dropped to 5.35%, says HSH. In June it was 5.92%
Applications for new home purchases have jumped 13%. For refinances they are up 18%, according to the Mortgage Bankers Association. “Hopefully, those refinances will serve to recast balance sheets for households looking for extra cash to spend and/or to further pay down outstanding obligations,” writes HSH vice president Keith Gumbinger.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.