Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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Jumbo Loan Rates Find Favor in Orange County’s High End Housing Market

Luxury Homes Need Jumbo Loans!The luxury home market is strong. Homes sales in Orange County, CA between $1 million and $2 million are up 46% in the past year. An economy that is growing, low jumbo loan interest rates and excellent home prices are the leading factors. In fact the bottom may have already passed!


According to the Fiserv financial services and technology firm, housing prices should grow an average 3.9 percent for the next five years. As of now, home prices are down 35 percent from their peak in 2006, Fiserv reports, adding today’s prices don’t adequately reflect the health of the sector. That’s definitely the case here. Orange County, CA is one of the hottest markets in the country. Housing inventory is at a 1.5 month supply level. Demand for homes has not been this high since June 2005. These two factors are creating a sizzling real estate market.

And this is not a temporary situation. Steven Thomas of Orange County Housing Reports says “every range is experiencing a tighter inventory compared to last year. From $1 million-$2 million, the inventory is tighter by 25%. Even homes above $2 million are experiencing fewer homes, 15% fewer.” In regards to demand, Steven points out that “demand is 25% stronger than last year. The expected market time for homes priced between $1 million and $2 million is 3.6 months.”


Money remains cheap to borrow. The jumbo mortgage rates are no exception. Locking up a 30 year fixed rate on a jumbo loan for less than 5.000% was incomprehensible. Now it’s a reality! Adjustable rate mortgages are even better in the low 3.000% range.

Jumbo loans are called non-conforming because they do not fall within Fannie Mae/Freddie Mac guidelines. Since they can’t be sold to Fannie Mae and Freddie Mac, each lender creates their own guidelines for qualification. Therefore jumbo loan programs can change considerably from lender to lender. In most cases, these loans will become portfolio loans, meaning they will be held by the bank or investor who underwrites them. They can set the maximum loan-to-value, FICO score requirements and interest rate pricing.

Finding a jumbo loan program that suits your needs can be challenging. Your lender should have access to many of them because one size does not fit all. Many investors have niches to address unique scenarios. Some have better rates and others are more sensible. For instance, you may opt for a rate that may be .125% better but we may be coming back to you many times for the most unreasonable of requests. But saving .125% or .250% may be considerable enough to deal with the increased processing aggravation. I say this not to scare you but to set the proper expectations.

High end housing is abundant in Orange County. From Coto de Caza to New Port Beach the housing is unique and luxurious. Just as no two people are alike, neither are their jumbo loans. If you need more jumbo loan program options we currently have over 15 jumbo investors to fit your home financing needs.

Scott Storace

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