From the Wall Street Journal:
Conventional Mortgage
Has Lenders Competing
By JILIAN MINCER
September 6, 2007; Page D6
While subprime and jumbo mortgage loans are drying up, there is plenty of cash flowing to borrowers with stellar credit who want conventional fixed-rate mortgages.
Banks and credit unions are battling for these customers with fee waivers, competitive interest rates and a willingness to negotiate on rates that have dropped in the past three months.
“I’ve talked to many banks who are anxious to lend,” says James Chessen, chief economist for the American Bankers Association in Washington. “A good credit risk will always have access to funds at the best rates in the market.”
This summer’s subprime crisis has tightened lending standards, making it extremely difficult for borrowers with less than perfect credit to get a mortgage, especially if they are stretching to afford their first home.
Even consumers with solid credit scores and high incomes are now finding it more difficult and more expensive to find jumbo mortgage loans, which are loans of more than $417,000. A mortgage that large is often necessary on either coast because of high home costs.
But individuals with good credit and a down payment are in the driver’s seat at a time when the average 30-year fixed rate mortgage on a loan of less than $417,000 was 6.5% yesterday, according to Bankrate.com’s benchmark 30-year fixed rate. The bigger the down payment, the more the borrower’s negotiating strength.
One reason for the current strong market for conventional, or “conforming,” mortgages is that there is plenty of cash to lend because “investors are willing to invest in these sectors,” says Joe Rogers, executive vice president at Wells Fargo Home Mortgage.