Jumbo Loans Popular Again!

Rates for a 30- year fixed Jumbo loan have dropped more than a percent in just a year.  Current rates are the lowest they've been since 2003.  A Jumbo loan is one that is not backed by Fannie Mae or Freddie Mac where the loan amount exceeds $729,750.  In California,  that makes up a large percentage of mortgages.  Rates have gotten competitive and because of this, applications have gone up..  Buyers who qualify for Jumbo loans have pristine credit therefore these loans may be considered low risk.  Before the financial crisis,these loans were sold on the secondary market freeing up more capital to lend more money to more buyers.  Afterward, these loans seemed risky and government insured loans were where underwriters felt secure.  Private lenders were stuck holding these loans in their portfolios and the luxury housing market ground to a halt.  Now the luxury market is moving again and Jumbo loans may lead the way to a housing recovery in California.