The credit crunch is still in effect for “Jumbo Loans”. This is having a negative affect on purchases of luxury homes across the country.
NAR reports:
“The national share of home sales above $750,000 has fallen from 4.4 percent in 2007 to approximately 2.3 percent in 2009, and the months’ supply of inventory has risen from 18.7 months to 41.1 months during that same period.”
Lenders More Cautious
Loan over $417,000 (this number may vary by region) are considered Jumbo.
“Lenders are keeping credit standards overly stringent for borrowers at the higher end of the market, and are increasingly reluctant to make jumbo loans,” said NAR Chief Economist Lawrence Yun at the 2009 REALTORS® Midyear Legislative Meetings in Washington, D.C. “The interest rate spread between 10-year treasuries and jumbo loans has also substantially increased, making jumbo loans much more costly than has previously been the case.”
The increased cost of getting a loan for luxury home buyers is slowing sales in this market, and pushing some buyers into a home that costs less and allows them to retain a regualr loan or simply pay cash for the home.