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Housing only for the wealthy?

By Judy Martel · Bankrate.com
Thursday, August 19, 2010
Posted: 3 pm ET

Jumbo mortgage rates continue to fall, hitting a new low of 5.26 for a 30-year-fixed this week in Bankrate's weekly Interest Rate Roundup. As  Senior  Financial Analyst Greg McBride notes in this video, the spread between jumbo loans and conforming loans (those less than $417,000) hasn't been this narrow since the beginning of the credit crunch more than three years ago. The conforming 30-year-fixed mortgage came in at 4.63 percent. Jumbo loans typically carry more risk, and are therefore offered at a higher interest rate, and only to those borrowers with excellent credit.

Recent, more stringent rules for mortgages backed by the FHA  mean that borrowers will face higher monthly fees, larger down payments, and will require better credit scores. Perhaps the lower jumbo rates and higher borrowing standards are signaling a revision to the "American Dream" of homeownership that only the rich can afford.

But maybe that's good. Anything that's harder to obtain inherently has more value for most people. And, the economy as a whole will benefit when it's not built on a house of cards that, as we've seen, can collapse with the flick of a finger.

What do you think of tougher standards for homebuying? Do you think everyone should be entitled to own a home, or is it acceptable to rent instead of buy?

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