Jumbo mortgages see exponential growth

by Justin da Rosa30 Jul 2015
The first half of 2015 saw jumbo mortgage market share skyrocket – but that market seems to be very localized.

“I haven’t seen jumbo mortgages increase too much in my area; though I have noticed a slight increase,” Ed Fournier of Connecticut Home Mortgage told Mortgage Professional Magazine. “In my area, jumbo mortgages I don’t really do many jumbo loans; they account for about five percent of all my loans.”

Fournier, and his corner of Connecticut, may be on the losing side of the phenomenon, but new numbers suggest other originators are definitely winning.

Jumbo mortgage lending grew 36 percent year-over-year to an estimated $160 billion in the first half of 2015, according to Inside Mortgage Finance. Jumbo loans now account for approximately 20 percent of all mortgage loans.

“The last six months have been great for jumbos,” said John Walsh, president of Total Mortgage Services told South Florida Real Estate news site The Real Deal.

Currently, the threshold for jumbo loans in most states is $417,000 and $625,500 in higher-priced markets, but the The Federal Housing Finance Agency is currently debating whether or not to raise those thresholds.

If the FHFA does decide to raise the baseline for jumbo loans, the new rule will go into effect on January 1, 2016.

And if the limit were to be increased, clients would more easily qualify for pricier homes – meaning a larger potential pool of business for brokers -- since more loans will be considered conforming.

Clients typically have to put less money down and aren’t required to have as high a FICO score for conforming loans than they do for jumbo loans.