Refinancing, which drove lenders’ profits last year, fell in the week ended April 25 to the lowest level since 2008, according to the MBA, after increases in borrowing rates. While the average rate for a 30-year fixed mortgage declined to 4.21 percent this week, it’s still up almost a full percentage point from a near-record low last May, data from Freddie Mac show.
Lower Rates
“That level of drop sends everyone everywhere looking for business,” said Joel Kan, director of economic forecasting at Washington-based MBA.
Lenders are also vying for jumbos since they don’t have to pay higher guarantee fees charged by Fannie Mae and Freddie Mac to insure the bonds, as they do with conforming loans, said Richard Lepre, an Alamo, California-based loan officer with RPM Mortgage. That means they can charge lower rates on jumbos, making them more attractive than traditional loans.
The rate at Wells Fargo for a 30-year fixed jumbo mortgage was 4.13 percent as of yesterday, compared with 4.25 percent for a conventional 30-year fixed loan.
JPMorgan modified its guidelines in the third quarter for making jumbo loans to take into account a client’s total assets at the bank. The bank made the change after seeing that customers who had long-term relationships with JPMorgan were less likely to default on their loans.
Leverage Relationships
The lender created a separate process last year to review all declined loans to ensure those decisions made sense. It also set up a group that works with wealthy clients who have more complex financial situations, such as self-employed borrowers.
“We leverage relationships to let the customers know we really want to do business with them,” said Lesley Corydon, a senior vice president in the private client mortgage group at JPMorgan.
JPMorgan’s jumbo mortgage originations represented 21 percent of its total originations in the first quarter of 2014 compared with 10 percent a year earlier, according to the bank.