Rock-bottom jumbo loan rates get buyers to borrow more

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Homebuyers are finding jumbo mortgages cheaper than traditional ones — something that has never happened before — and are taking advantage of the better rates by borrowing more.

The average 30-year fixed-rate jumbo mortgage stood at 4.71 percent last week, compared with 4.73 percent for the average 30-year fixed-rate conforming mortgage, according to the Mortgage Bankers Association.

“In my 30-year career, I’ve never seen nonconforming loans priced below conforming loans,” Brad Blackwell, executive vice president at Wells Fargo WFC +0.27% Home Mortgage, told the Wall Street Journal.

The better rates on jumbo mortgages are changing the strategy of lenders as well as homebuyers.

“I’ve had situations where I’ve told clients, ‘You don’t need to borrow within the [conforming] limit. I can get you a lower rate if you borrow a little more,’ ” Rolan Shnayder, director of new-development lending at H.O.M.E. Mortgage Bankers in New York, told the newspaper. [WSJ]  – Hiten Samtani

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