Borrowers found it easier to access credit in June, but it was jumbo mortgage credit that saw some of the highest growth. According to a new report from the Mortgage Bankers Association, jumbo loans—mortgages with higher debt—are on the rise and were easier to get in June than any other month in the past eight years.
Jumbo mortgage credit rose for the sixth straight month, rising to its highest level since 2011, when the MBA’s survey began.
A jumbo loan is a type of financing designed to finance luxury properties and homes that exceeds the limits set by the Federal Housing Finance Agency. The values vary by state. As of 2019, the limit for a jumbo mortgage was set at $484,350 for most of the country, and up to $726,525 in counties with higher home values.
Mortgage rates for jumbo loans have remained low, which may be adding to their appeal. The average contract interest rate for 30-year, fixed-rate mortgages with jumbo loan balances—those greater than $484,350—increased to 4.03% from 4% last week, the MBA reported Wednesday.
“Credit availability has generally increased in 2019 as lenders have worked to meet affordability challenges,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “Because mortgage rates have recently fallen and home price growth has decelerated in many markets, credit availability may stabilize at its current levels.”