Growing Demand for Jumbo Mortgage Loans


The number of people who use mortgages for financing the purchase of a luxury home is increasing. This coincides with an increase in supply as lenders try to fill the gap left by the ever lower demand for home loan refinancing. The upward trend in the market segment for jumbo loans is expected to remain as they become ever more attractive to home buyers.

The jumbo mortgages offer finance over $417,000 and in some areas with steep home prices over $625,000 to home buyers. In May 2014, the applications for home loans between $417,000 and $625,000 rose by 2.5% compared to May 2013. For comparison, the applications for loans between $300,000 and $417,000 fell by 19.4% on an annual basis. The applications for loans for less than $150,000 dropped down by 18.8% in a year.

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The rise in the demand for jumbo mortgage loans comes primarily from new home buyers. It is driven by the growing home values especially in traditionally hot markets such as California. The low mortgage rates have a positive impact as well. Currently, the average interest rate on 30-year fixed jumbo loans is 4.29%. It is quite close than the average rate on conventional loans with the same term.

More lenders are offering jumbo mortgage loans and they make them more flexible than ever before in order to attract wealthy customers. There are products with 15% down payment instead of the traditional 20%. There are adjustable rate jumbo loans with a longer fixed-rate period. Lenders are providing more favorable terms and conditions in an attempt to keep their previous mortgage activity as the demand for refinance has dropped immensely while the demand for conventional loans for the purchase of new homes is still low.

At the same time, the requirements for jumbo mortgage loans remain tight. Applicants have to have a credit score in the high 700’s and sufficiently high income and savings in order to qualify.



Mailynne serves as a content strategist and writer for She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.


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