Jumbo Loans, Big Trouble
The mortgage market mess is catching up with both lenders and borrowers beyond the subprime category. Suddenly, so-called jumbo mortgages --anything above $417,000 -- are harder to get and that's a problem for people in some big markets like new York City, where properties are unusually expensive. Thirty-year Jumbos are now costing 70 basis points more than conventional mortgages. Some lenders have jacked rates as a way of discouraging buisnesss.
Mortgage Activity Up
On the positive side, mortgage activity increased for the second week in a row, seeming to fly in the face of a spate of reports pointing to a crisis of confidence in the mortgage industry.
The Mortgage Bankers Association's seasonally adjusted mortgage application index rose 3.4% in the week ended Aug. 10 to 678.7, its highest level since the middle of May, driven by growing demand for refinancing and home purchase loans.
Analysts downplayed the gain somewhat, speculating that borrowers may be filing multiple applications as more mortgages get rejected, thus distorting the overall data.