Federal Retreat on Bigger Loans Rattles Housing

if you look at current rates, there is not much of a difference between those loans that are under 729 and those that are over 729. on a 30 year its about half a percentage point. i am assuming loans above 729k are not backed by the govt.

Many active lenders in the Hamptons are portfolio lenders that do not have pricing models reflective of the conforming loan limits. I have products that are priced better than the FNMA products and the rate is the same at $417k, $729k and even $1,500,000 - in fact it is true for almost all loan products (5/1, 7/1, 10/1 and even the 15 year fixed). The one exception to this is the 30 year fixed. As ekartash mentions, rates can be .5% higher for non-conforming (those loans over $729k) 30 year fixed rate mortgages - although the spread is a bit less, it can be as much as that.

jrnonlinere - although most buyers (greater than 50%) take 30 year fixed rate mortgages when borrowing less than $417k, many more buyers on higher loan levels opt for ARMs - especially on loans over $1mm.

That is my perspective as a local mortgage banker. Hope it helps!

The high balance conforming loan limits are going back down to $625,500 from $729,750 on September 30, 2011. Rates on jumbo financing on ARM products have about a 25 bps spread compared to government backed loans, while fixed rate products are about 37.5bps. If you need any more information, a pre-qualification, or just a rate quote, please give me a call.

Jim McPartland
Wells Fargo Private Mortgage Banking
212.805.1131
james.mcpartland@wellsfargo.com

primary concern is that lower limits will remove some buyers from the market...maybe these are first time vacation home buyers, but, nonetheless, this is the group that those that want to 'move up' would sell to. can't help pricing from a seller's perspective imho.

not sure that i would be financing via an ARM product these days except if i had serious expectations that my duration in the home would correspond to the length of the ARM - regardless of the short-term 'savings'. if the monthly payment was the issue, i would probably just put more down. hope the weather is nice out there. will be out in easthampton for the first two weeks of august - will definitely spend time looking while there and will check out the north fork as well - only been there once in 30 years!!!!