Something very unusual happened with mortgage interest rates this month. The interest rate on jumbo mortgages actually fell below the interest rate of the conventional 30-year fixed-rate loan. Mortgage experts were quick to point out that this latest quirk of the housing recovery had never happened before. Conventional mortgages are 15-year and 30-year fixed-rate mortgages up to $417,000. According to the Freddie Mac Primary Mortgage Market Survey (PMMS), interest rates on the 30-year fixed rate mortgage averaged 4.57 percent. Typically, borrowers pay .07 percent in fees if they have at least 20 percent in cash to put down on their purchase.
Jumbo loans are those from $417,001 to around $750,000 (some banks only price jumbo loans to $650,000 and others go higher). Traditionally, borrowers who needed a home loan bigger than a conventional mortgage would pay more for it, sometimes a half percentage point or more. So if a conventional 30-year fixed-rate mortgage carried a 4.57 percent interest rate, you could easily expect to pay more than 5 percent for a larger jumbo mortgage. (Loans in excess of $1 million are typically priced on an individual basis.)
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Source: The Washington Post