Mortgage financing still available, although Jumbo loan rates have gone higher

The National Association of Realtors reports that mortgage disruptions are working their way through the housing market. Lawrence Yun, NAR senior economist, noted that “These temporary problems are primarily with jumbo loans, and there are continuing issues for sub prime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.

“If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later,” Yun said.

The average sales price in August 2007 in Northern Virginia was $556,574, which is slightly more than a 3.6% increase from the average sales price of $537,196 in August 2006. Since a good majority of buyers in Northern Virginia are getting Jumbo loans over $417,000, they are borrowing loans with higher interest rates. The spread between conforming loans and Jumbo loans a few months ago might have been .25% in note rate, and now it is about 1%.

Some lenders are getting creative with prices in the $500K to $600K range, offering conforming first trusts of $417,000 with low fixed rates, and sizable second trusts, to create a blended interest rate that is more attractive than one Jumbo mortgage loan.