JUMBO Loans Making A Comeback

A year ago, even the most creditworthy borrowers struggled to secure home loans of more than $729,750 - the cutoff for conventional conforming loans backed by Fannie Mae and Freddie Mac. But since this spring, the interest-rate spread between conforming and jumbo loans has narrowed and the number of lenders offering the loans has jumped. As of late July, lenders were offering jumbo loans at a typical rate of about 5.5 %, down from almost 7 % a year earlier and not too different from what's available for conforming loans, according to data available on Bankrate.com. NAR Chief Economist Lawrence Yun said in a late-July press conference that sales of existing homes priced at $750,000 and above jumped 30% from mid-2009. Among the big players in the market: Citigroup, which says in a July 10, Wall Street Journal article, that it has seen a 30% rise in jumbo business, and Bank of America also claims a big push in the jumbo arena.