Although limited inventory in the California real estate market continues to challenge buyers and sellers alike, one bright spot for Northern California home buyers remains consistent: jumbo mortgages, or non-conforming home loans with balances above $679,650, are predicted to remain attractively priced through the end of the calendar year. With the average purchase price of a typical Alain Pinel listing at approximately $1.6 million, attractive jumbo mortgage interest rates mean qualified buyers will continue to have access to affordable mortgage options as limited home inventory becomes available.
This is the continuation of a trend in the mortgage market for the last two to three years. Traditional mortgage vehicles have seen slight upticks in their interest rates, and jumbo mortgages continue to maintain about an eighth to a quarter percent below most conforming loan rates.
What is creating a challenge for lenders is a slight contraction of the overall mortgage market. In just the past two months, we’ve seen a small but steady rise in conforming mortgage loan rates. That in turn will translate to fewer home refinances overall in 2018 when compared to 2017. It is likely that this contracted mortgage market will push jumbo mortgage lenders to find more lenient ways to lend in order to compete for market share, with big institutional lenders leading the charge to relax guidelines.
This trend bodes well for Northern California home buyers with affordability continuing to be one of the main challenges to home ownership.