According to Bloomberg, the jumbo mortgage market is booming while the middle class mortgage market is … dooming?
After lenders raised credit standards following the 2008 financial crisis, many lower-income Americans have been shut out of the market. In January, applications for loans of less than $150,000 to purchase homes fell 12 percent compared with a year earlier, MBA data show.
Total mortgage lending, including refinancing, dropped 39 percent to $1.1 trillion in 2014, according to MBA. Jumbo originations declined 14 percent last year, the smallest drop among all mortgage products, according to Inside Mortgage Finance’s Cecala.
True, wealthy households have other assets that lenders can attach as security. And jumbo loans are not purchase by government mortgage giants Fannie Mae and Freddie Mac.
Unless first time homebuyers can become instant millionaires, I suggest renting.
This all has the feeling of the Jimmy Steward flick “It’s a Wonderful Life” where the bank president (Potter) asks George, the S&L president for additional collateral on a loan.