According to an interview with Vijay Lala of Bank of America Home Loans, in 2009 the larger national lenders like BofA began making more jumbo loans. These large lenders were the only ones with the financial strength to hold the loans. Small lenders without the ability to securitize jumbo mortgages, or unable to hold loans in their portfolios could not get into the market.
However that seems to be changing, as the securities market for jumbo loans is coming back. Based on a recent article in the Washington Post, Redwood Trust, in a SEC filing, said it would sell $222 million in securities backed by pools of jumbo mortgages. The article stated that the average balance would be $933,000.00. These would be the first securities issued since the market collapsed.
If Redwood Trust is successful in attracting investors, lenders in other national banks should begin to consider also making jumbo loans, providing more completion.
Jumbo loan rates are currently about 6% and are down from about 8% during the top of the mortgage crisis. Lenders are currently requiring at least 20 percent down and approval times can be lengthy.
This trend is good news for our Big Sky and Bozeman markets as we have quite a few properties that require jumbo loans. Combined with the excellent values and large selection currently available in our markets, buyers have a wonderful window of opportunity to acquire a tremendous property at an adjusted price.
For example, the Southwest Montana Listing Service currently is showing 145 properties listed in Areas 1 and 2 (Bozeman area) that are priced above $700,000.00 and 84 homes in Big Sky priced above $1M; a great selection from which to choose a new fine home! In conducting a search of sold properties for 2009 the MLS shows that 10 fine home properties in Big Sky and 23 in Bozeman closed during 2009. This compares to the first quarter of 2010 where 9 homes in Big Sky and 18 in Bozeman are closed or are pending during only the first quarter of 2010. Clearly the higher end market is beginning to pick up some momentum once again.
Posted by
Don Pilotte, Broker, GRI, RRS
Prudential Montana Real Estate
Big Sky Office
55 Lone Peak Dr, Ste. 3
Big Sky, Montana 59716
cell:(406) 580-0155
direct:(406) 995-4060
email:don.pilotte@prumt.com
