Jumbo Mortgages Are Coming Back
As the real estate
market recovers, high cost metropolitan areas have seen a ramp up in home buying
activity which drives jumbo lending volume, says Ghazale Johnston, a managing
director with Accenture Credit Services.
â€œMany investment banks
and brokerage firms view mortgages as a growth area," she says.
Data continue to
confirm a widespread expectation to simultaneously see lenders prepare to
comply with the new risk adverse Qualified Mortgage rule requirements and renew
focus on lower risk jumbo loan originations that are less expensive to
For example, the 3Q13
National Mortgage News list of second lien lenders ranked by average loan size
starts with Ridgewood Savings Bank, Ridgewood, N.Y., whose jumbo loans increased
98% to $200,000 up from $101,250 in the same quarter of 2012.
TD Bank, of Portland,
Ore., which is very active in the New York area, also reported a significant
average loan size increase of 41% starting from a much lower basis of about
$50,000 in 2Q12 to $70,500 in 3Q13.
CitiMortgage, Inc., saw
a much less significant increase of 14%. The average loan size reported for the
same quarter was almost $170,000.
Bank of America was the
only other major bank that also increased the average loan size, albeit only
9%, from roughly $104,000 to $113,500.
The increase of the
conforming loan limit for high-cost areas to $729,000 until late 2011 followed
by the return to the loan limits for high-cost areas shows the debate over loan
limits is not over.
according to Corelogic, to no one's surprise California leads as the state with
the highest number of jumbo loan originations and volume, followed by Virginia
and New York.
including a yearend 2013 prediction from the Mortgage Bankers Association,
suggests loan originations will decline by over 32% in 2014 to $1.2 trillion
due to a significant decline in rate-sensitive refinance transactions, while
purchase transactions are expected to grow by only 9%.