The revival in the luxury real estate market is being fueled by growth in jumbo mortgages, Reuters reports. Jumbo loans typically are more than $417,000.
“Jumbo loans are returning to the mortgage market after almost disappearing entirely in the wake of the credit crisis of 2008 and the real estate meltdown,” Reuters reports. “Most lenders stopped making new jumbo loans when the private secondary market dried up in the credit crunch.”
But now jumbo loans are coming back. Lenders are reserving jumbo loan approvals to qualified borrowers, and some reportedly are even offering these “once-pricey jumbo loans at interest rates that are barely higher than conventional mortgages,” Reuters reports.
“The jumbo market may fare better than the overall mortgage market in 2013,” says Guy Cecala, publisher of Inside Mortgage Finance.
But while jumbo loan volume was about $200 billion last year, it’s still far below the $348 billion in jumbo loans issued in 2007. Cecala predicts that 2013 volume of jumbo loans will reach about $220 billion.