In the July issue of New Homes (available now at these locations!), columnist Don DeBat surveys the summer house-hunting market.
The selection of new homes is great, DeBat writes, but the summer will also bring higher mortgage rates for luxury home buyers and those who continue to wait on the sidelines.
Experts say Freddie Mac and Fannie Mae’s reluctance to boost the jumbo-loan limit on mortgages they buy in Chicago to the $729,750 now allowed in other high-cost areas such as sections of California, Arizona, Colorado, Florida and the East Coast likely will have a slowing effect on the market for luxury homes.
Some luxury home buyers are side-stepping the low jumbo mortgage limit here by opting for a higher down payment and taking out two loans, one for $417,000 and a second for a line of floating credit for the balance.
“Mortgage rates jumped after a number of Federal Reserve Board officials expressed concern over a threat of inflation,” said Frank Nothaft, Freddie Mac vice president and chief economist. Some analysts believe the Fed will raise rates more aggressively over the year than previously thought, he said.
Read all of Don’s column here.