The interest rate for jumbo loans—those greater than $421,100—dropped five basis points last week, averaging 3.99 percent for the week. That is now 13 basis points lower than the conforming rate, which is the largest spread between jumbo rates and the conforming rate since March 2016, according to the Mortgage Bankers Association.
"A strong appetite for jumbo loans and a highly competitive jumbo market has led to increased availability and lower pricing," says Joel Kan, an MBA economist. Sales on the higher end of the market are increasing, which also explains the stronger demand for jumbo loans lately.
Meanwhile, sluggish inventory levels of homes for sale on the lower end are keeping applications down, according to the MBA. Total mortgage application activity—for refinancings and home purchases—inched down by 0.5 percent week over week on a seasonally adjusted basis, the MBA reported. This marks the second consecutive week that applications have barely budged.
Applications for refinancings last week eked out a 0.3 percent increase from the previous week, but remain 38 percent lower than the same week a year ago, when rates were lower. Mortgage applications to purchase a home dropped 2 percent for the week. Still, purchase applications are 9 percent higher than the same week one year ago, the MBA reports.
The 30-year fixed-rate mortgage averaged 4.12 percent last week, the lowest rate since last November.