A significant decline in jumbo mortgage rates (loans above $417,000) are helping to move some of the highest-end inventory. Sales volumes of homes worth more than $1 million across the country are up more than 35% from this time last year according to the National Association of Realtors. They also stated that homes between $700,000 and a million were up 29% from last year.
There is no question that high unemployment and concern about the economy is pressuring the housing market at all price points, but it is clear that the ultra-low mortgage rates are having a dramatic impact on the highest end of the price spectrum.
Conventional lenders (Fannie Mae and Freddie Mac) do not make jumbo loans. Those loans usually are held by banks. These banks are becoming more comfortable making higher end loans these days and are looking to take advantage of a premium that they just can't earn with a conventional mortgage where their margins are simply too thin.