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First Time Ever – Jumbo Mortgage Rates Lower Than Conforming Mortgage Rates

For the first time ever, average 30 year jumbo mortgage rates are lower than 30 year conforming mortgage rates in a recent mortgage survey. The Mortgage Bankers Association released their Weekly Mortgage Applications Survey showing average 30 year jumbo rates at 4.71 percent and average 30 year conforming rates at 4.73 percent.

The Federal Housing Finance Agency (FHFA) sets mortgage limits on conforming loans. Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” The conforming loan limit in most of the U.S. is $417,000 for single family homes. Conforming limits for higher-cost housing areas within the continental U.S. run can be $625,500 and in Hawaii run as high as $721,000.

Lower Mortgage Rates on More Expensive Homes

You can get a lower mortgage rate by actually buying a home with a price over the conforming loan limits. This doesn't mean that your payments would be lower, however, since your monthly payments would still be higher because the balance on a jumbo loan would be higher then the balance on a conforming loan.

The spread between both types of loans has been narrowing for several years now. Back during the financial crisis when it was hard to find a lender offering jumbo loans, the rate spread was around 2.00 percent. conforming rates are higher than jumbo rates due to the sharp run-up in 10 year bond yields recently, which drove 30 year conforming rates much higher.

Jumbo Mortgage Rates Will Move Higher Than Conforming Rates

In the coming weeks, jumbo rates will be higher than conforming rates but the "rate spread" will still be lower than the historical norm of 0.25 percent to 0.50 percent. In the MBAA's mortgage survey this week, average 15 year conforming rates are at 3.75 percent. Since the MBAA doesn't release data on average 15 year jumbo rates we won't know if average 15 year jumbo rates are lower than average 15 year conforming rates.

Fixed Conforming Mortgage Rates

First Time Ever Jumbo Mortgage Rates Lower Than Conforming Mortgage RatesMortgage rates today on 30 year conforming loans reported by Monitor Bank Rates are averaging 4.67 percent, up sharply from the previous week's average 30 year rate of 4.47 percent. Average 30 year rates have been on a tear, moving more than 125 basis points higher since the beginning of summer.

Current mortgage rates on 15 year conventional loans are averaging 3.66 percent, up 16 basis points from last week's average 15 year mortgage rate of 3.50 percent. In the beginning of June, you could find lenders quoting 15 year conforming refinance rates as low as 2.25 percent with points.

Historically Speaking, 15 Year Refinance Rates Still Low

Now the lowest 15 year refinance rates available are above 3.00 percent at 3.125 percent with points. Though rates have moved higher, looking back current rates are still very low. Looking back at average 15 year rates in Freddie Mac's mortgage rate survey, we see 15 year rates in September 1991 averaged 8.69 percent.

Jumbo Mortgage Rates Today

Today's mortgage rates on 30 year jumbo loans reported by Monitor Bank Rates are averaging 4.86 percent, up from last week's average 30 year jumbo rate of 4.71 percent. Jumbo rates reported by us are still higher than conforming rates.

If you're wondering why the MBAA's rates are different from ours, the methodology for compiling average rates is different. Also the average rates reported by us in this article are as of today, whereas the average in the MBAA's report is for the week ending August 30, 2013.

Mortgage rates today on 15 year jumbo loans reported by Monitor Bank Rates are averaging 4.18 percent, up from last week's average 15 rate of 4.09 percent.

Today's Average Adjustable Mortgage Rates

Average 5 year adjustable jumbo mortgage rates reported and offered by us are still lower than average 5 year conventional adjustable rate. In fact, the rate spread between the two types of mortgage loans is rather large.

5 year jumbo adjustable rate are averaging 3.32 percent, up from last week's average 5 year jumbo adjustable rate of 3.57 percent.

5 year conforming adjustable rates are averaging 3.32 percent this week, up from last week's average 5 year conforming rate of 3.30 percent.
Author: Brian McKay
September 6th, 2013