Nashville Jumbo Mortgage Outlook

elephant photo for nashville jumbo mortgage post“The Jumbo Jungle” may sound a little like the elephant compound in a wild animal park, but it’s actually a rarely-quoted tab under The Wall Street Journal’s online Real Estate section. The ‘jumbos” being discussed are the trunkless kind – the massive mortgage loans whose center rings are found in binders instead of circus tents.

Judging from the recent discussions Nashville homeowners will find lately, these jumbos aren’t about to face extension anytime soon. For one thing, 2015 recorded the greatest activity for the giant loans ever. This year’s follow-up, according to the WSJ, will be unlikely to slow the pace.

The reason behind the jumbo mortgage market’s power has a lot to do with the down stock market. Last week ended with another drop, led by the tech stock sector. Investors were thought to have been disturbed by some poor earnings performance and a general “realization that the world is slowing.”

According to Inside Mortgage Finance, jumbos accounted for a full fifth of all mortgage lending last year – the highest percentage of the market since 2002. Nashville residents looking to borrow in the high-end market may also find an assortment of responsive lenders as asset investment dollars move into real estate as “a safer investment.”

It was generally believed that the market dip made it more likely to briefly stop any increase in interest rates. By week’s end, mortgage rate research website HSH.com marked another drop in conforming rates, as well as the “Federal Reserve’s apparently more cautious position with regard to raising interest rates.” That “apparently” was most likely well advised, seeing as how industry experts’ recent history of hit-and-miss predictions.

Nonetheless, the Jumbo Jungle writers boldly headlined “WHAT’S AHEAD FOR JUMBO-LOAN BORROWERS in 2016.” Their answer was elevated probability for jumbo loan interest rates holding below 4% “…for a while longer, which also could make borrowing large sums more attractive.” Going further, JJ quoted one mortgage sales manager implying that the angst of future rate rises could spur a “home buying frenzy” in the spring, adding to a surge of refinancing by adjustable-rate borrowers reaching the end of their fixed rate terms.

Nashville jumbo loan applicants won’t have to be in any kind of a ‘frenzy’ to take advantage of today’s continuing low rates and a broad progression favoring an easing of credit score requirements. I’m glad to help point my clients toward the most active local lending resources – those that consistently provide sound service to Nashville homeowners.