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Housing Starts Rise While Jumbo Mortgage Rates Hold Steady

Jumbo mortgage rates this week were virtually unchanged from the record lows they have enjoyed for most of December. As people around the country made preparations for the next two holiday weekends, a couple of developments on the residential housing sector made headlines but did not manage to move jumbo loan rates in any significant direction. Most banks and mortgage brokers are deviating from the national averages about one basis point in either direction.

The 30-year fixed jumbo mortgage rates are currently at 4.415 percent on average, while 15-year fixed jumbo loan rates are at 3.72 percent. The average jumbo Adjustable Rate Mortgage (ARM) loans can be obtained at just 2.5 percent. These low rates have mostly prevailed for the last three months.

The origination fees on jumbo loans are fluctuating between 0.7 to 1.0 percent around the country. There are no current indications that the tight credit and lending guidelines will abate in the near future.

On the Tuesday before Christmas, the National Association of Home Builders (NAHB) released a report which indicated that housing starts in November had sharply increased more than expected. The number of permits filed to build new homes was 681,000, a change of 5.7 percent over the previous month. Housing starts rose over 9 percent, a very positive number that translated into a stock rally on Wall Street. The NAHB observed that the sentiment in December was unusually positive when considering that home prices are still falling in some areas of the country, and that foreclosures are expected to continue.

An interesting factor in the NAHB report is that many of the housing starts are not for single family homes, but rather for new apartment buildings. The rental market has been heating up since 2009, and many families who have lost their homes to foreclosures are now looking at apartments as reasonable housing options.

The Mortgage Bankers Association reported that the number of mortgage applications for refinancing keeps increasing, while purchase applications have dipped by 8 percent year over year. Interestingly enough, jumbo mortgage applications lead the pack in both refinance and purchase applications.