For the last half of 2007 and all of 2008 the hardest to sell market in the Puget Sound area was homes that were in the roughly $650,000 to $1.5M range. Why? Because most of those properties required JUMBO loans for the buyers to secure the purchase and this was the first and hardest hit segment of the credit market for residential sales. Most of these loans were held in portfolio programs at banks because they weren’t easily bundled into the other securitized packages that were being sold on to Wall Street because of their perceived higher level of risk because of the dollar sizes involved.
For those uninitiated to the world of JUMBO loans these are the ones that are just above the conforming limit, which has been at $417,000. There is a temporary bump up in higher priced areas (of which the Seattle/Bellevue area qualifies) to $567.5k and $506k but those still have a slightly higher rate associated of around a half point (.5%) above the rates available at $417k.
What’s interesting right now is that there is a mixed bag of news regarding JUMBO loans and their availability. One report shows a lender that specialized in these type loans filing Chapter 11 and getting out of the market. But another report says that some of the bigger players have decided it’s an underserved market and they’ll be moving back into that realm. Two of the lenders looking to provide JUMBO loans are Bank of America and ING.
I’m hoping that if these bigger players do get into that lending niche it will help open up some of the buyer activity for homes in that price range in our area. We’ve got a client or two that could use it right now and we’d like to see that part of our market get moving in a positive direction again. Cities like Bellevue, Newcastle, Medina, Mercer Island, Redmond, and Woodinville as well as higher priced areas of Seattle could really benefit.
