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Rates on jumbo home loans could jump this fall
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Rates on jumbo home loans could jump this fall
Rates on jumbo home loans could jump this fall
If you’re shopping for a $700,000 mortgage, you’d better act fast. Rates on jumbo loans could jump this fall, though two California congressmen are working fast to halt the rate hike.
Tucked inside the stimulus package Congress passed three years ago was a provision designed to jumpstart housing. In expensive real estate markets like Southern California, the government boosted its guarantee on home loans to nearly $730,000. Now, those higher loan guarantees are set to expire.
Republican Congressman Gary Miller of Diamond Bar has cosponsored a bill with Democrat Brad Sherman of Sherman Oaks to make the higher loan limits permanent. Miller says, "I don’t believe anybody should be discriminated against based on geography."
Sherman warns of downward pressure on the housing market if sellers have to drop their asking prices so buyers can qualify for loans. "Even if your home’s only worth in these times half a million dollars, if the homes in Encino drop by a hundred, the homes in your neighborhood are going to drop commensurately."
The federal government has extended the higher loan limit twice. It’s set to expire Sept. 30.
Ron Phipps, president of the National Association of Realtors, says Congress should act now.
"We believe that particularly in this time when the housing market is seeking balance and stabilization, that continued ratcheting of the availability of credit and mortgage money makes that recovery and the stabilization more fleeting and harder to realize," Phipps said.
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Phipps says California’s only one of 36 states that would feel the pain if jumbo loans become much more expensive. He visited Washington to deliver the message that home ownership is good for Americans’ bottom line; Phipps says the average homeowner’s net worth, even after the housing crash, is $180,000. For renters, he says, that average is $4,600.
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