High jumbo rates freeze housing
Letter to the Editor
By Inman News, Thursday, May 21, 2009.Re: 'Jumbo lending crunch killing high-end sales' (May 18)
Dear Editor:
Great article on the impact of jumbo mortgages in the housing sector. However, we need to go beyond just the "high-cost" markets. Every market has pockets of affluent communities ... North Florida has several and we are not a "high-cost" market.
Without affordable jumbo mortgages in all markets, consumers cannot refinance or purchase. The result is a freeze in the housing market, which will only lead to significant price reductions in the existing inventory.
When jumbo clients can refinance at affordable rates they will spend that monthly savings in the economy.
When jumbo rates come down in all markets, buyers can afford to purchase a jumbo home. This is analogous to the economic flow of goods and services: Everything is dependent on something.
Ken Jones
Senior vice president
Atlantic Coast Bank
Jacksonville, Fla.
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Submitted by Sean OToole on May 21, 2009 - 7:03am.
Price is a function of income and loan terms. Clearly we have a lot of jumbo markets here in CA that are unaffordable given incomes in those areas and the current jumbo rates.
But perhaps it is prices, not rates, that need to come down. At the end of the day both accomplish affordability, yet with reasonable, and sustainable, interest rates, we have a lot better chance of surviving and thriving as baby boomers retire in droves and begin relying on fixed income from investments.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
ForeclosureTruth.com
Submitted by Ruthmarie Hicks on May 24, 2009 - 9:03am.
What I am seeing is a narrowing of pricing - with high-priced homes going down faster than more modest homes. The "tipping point" appears to be the level where jumbo loans are needed.
I have to say though that there is more to a large home than its price tag and mortgage. Heating, cooling and general maintenance costs are astronomical in our area. The combined effect of mortgage rate, and maintaining homes like these are contributing to price declines.