Newspaper article THE JOURNAL RECORD

Area Banks Enjoy Strong Demand for `Jumbo' Mortgages

Newspaper article THE JOURNAL RECORD

Area Banks Enjoy Strong Demand for `Jumbo' Mortgages

Article excerpt

Economists have attributed growth in construction and consumer spending with keeping the national economy out of recession.

The housing sector may be aiding the local economy as well. In Oklahoma City and its suburbs, growth in the housing market has been evidenced by continued growth in "jumbo" loans -- those for more than $275,000 -- for home purchases, according to local lenders.

Lyne Tracy, an official with Bank of Oklahoma Mortgage, said the demand for jumbo loans is driven in part by a surge in upscale housing projects and local consumer confidence.

"We're seeing more projects go up -- Gaillardia, some of the areas in Edmond -- and, of course, the property values in Oklahoma City have gone up, too," Tracy said. "So I think there's a lot more demand for a jumbo loan than there was five years ago -- even though a jumbo loan was smaller five years ago because that conforming loan amount was probably $175,000."

Debbie Binion, vice president at First National Bank of Edmond, said local growth in her suburban community continues to support the upscale housing market.

"In Edmond, I think the jumbo loans are up just because of the market that we have," Binion said. "I mean, there are so many more jumbo-priced houses up here."

Despite the size of jumbo loans, both Tracy and Binion said rates are not a primary factor in consumer decisions regarding the loans.

"Rate is not a huge issue on the jumbo (loans)," Binion said.

The maximum conforming loan amount allowed is $275,000. Interest rates on loans above that level, or "jumbo" loans, are usually higher than the rates charged on smaller loan amounts. As a result, for a $275,000 loan with a 45-day lock, you could get a 30-year fixed rate of 7.125 percent with no discount points or origination fee, but a loan larger than $275,000 could involve a 7.5 percent rate.

Generally, jumbo loan rates are 0.125 percent to 0.25 percent higher than the rates available for smaller loans, Tracy said.

For lesser loan amounts, most borrowers want a fixed-rate because of the predictability, but Tracy said people with the financial resources to buy homes worth $250,000 and up don't need predictability as much.

"What we see here in our local office is a lot of those people don't go with a fixed-rate mortgage," Tracy said. …

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