Jumbo mortgage rate falls even as conforming loans rise

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Most mortgage rates ticked up slightly this week, but if you’re looking to take out a large loan, you’re in luck: the average rate on a 30-year jumbo mortgage fell to an average 3.37 percent in Bankrate’s survey.

A jumbo loan, or nonconforming mortgage, is one that exceeds the limits for conventional home financing. In most places you’ll have to get a jumbo mortgage if you’re planning to finance more than $548,250 of your home purchase. In more expensive areas, that limit jumps to $822,375. Interest rates tend to be slightly higher on jumbo mortgages than on conforming loans, because lenders aren’t able to bundle them into mortgage-backed securities, which means the risk stays on their books for the entire loan term.

Whether or not you need a conforming mortgage is all about how much financing you need; it’s not directly tied to the price of the property you’re purchasing. If you’re buying a $4 million penthouse for cash, you won’t need a mortgage, and if you’re buying a $548,250 house with 20 percent down, you’ll be able to get a conventional loan.

Despite this reprieve for homebuyers with high-end tastes, it’s unlikely that these low mortgage rates will last for long. They’re already going up on other loan classes, and in Bankrate’s weekly poll, most experts predicted further increases are on the horizon.

“Rates may drift a bit higher this week after all the Reddit excitement led to lower Treasurys,” said Gordon Miller, owner of Miller Lending Group in Cary, North Carolina. “The market seems to have taken back control thus creating an early stock run up for the week, which — if it continues — could push the 10-year back over 1.15 percent.”

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Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.