How Jumbo Mortgage Slowdown May Help New Homeowners
Q: Gerald, my daughter has been working for ten years since college and still can’t afford to buy a home. Is there anything on the horizon that will make it easier for first time homebuyers to buy? Jessica, Fishkill, NY
A: Jessica, since the financial crisis, banks have tended to cater to wealthier, higher income customers, however, jumbo loans, which are mortgages too large to be sold to Fannie Mae and Freddie Mac fell by more than 10% last year.
The jumbo market does not have the demand it previously did–refinancings have slowed and the new tax law with limits to SALT deductions has reduced incentives to buy larger homes. Some banks have already begun to embrace multi-generational home loans, this new market reality presents an opportunity for banks to adapt to focus more on finding new and creative ways to lend to first-time homebuyers. Thanks for your question, Jessica.
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