Rich people are getting mortgages cheaper than you
Rich homebuyers can now get mortgages cheaper than pretty much everyone else.
In an unusual twist, lenders are offering rates on jumbo mortgages that are more than a quarter of a percentage point lower than those on the conforming loans backed by Fannie Mae and Freddie Mac. The government-run agencies require conforming loans to be below $417,000, unless they are for homes in high-cost areas like New York or Los Angeles,where the limit is $625,500.
Jumbo loans exceed those dollar limits and, historically, banks charge higher rates on them — about 0.25 percentage points more — than they do for conforming loans, according to the Mortgage Bankers Association. But over the past couple of months, the tables have turned.
This week, Wells Fargo (WFC, Fortune 500) advertised a 30-year jumbo mortgage at a rate of 4.125%, significantly lower than the 4.5% rate it is offering for a 30-year, fixed-rate conforming loan. US Bank (USB, Fortune 500) is offering a jumbo for 3.875% this week compared with 4.25% for a conforming loan. And Chase’s (JPM, Fortune 500) jumbos have been running a quarter of a percentage point below conventional mortgages, as have TD Bank’s (TD).
“Never in my memory have jumbos been such a bargain,” said Peter Grabel, a loan officer at Luxury Mortgage Corp. in Stamford, Ct., with 13 years on the job.