Boston mortgage loan rates may rise in fall, still at historic lows
Jul 2011 19

There are plenty of condos for sale in Boston for under $417,000, the standard “conforming rate” for home mortgage loans. But, many buyers in the Back Bay, South End, and Beacon Hill neighborhoods end up with “jumbo” loans, which are for higher amounts, and almost-always come with higher interest rates.

Interestingly, jumbo rates are very low right now, compared to conforming loan rates, as the Wall Street Journal pointed out recently.

The spread between the average loan rates is just 0.43% right now. This is great news if you’re looking to buy soon.

What will happen later this summer and in the fall is unknown, but the common held wisdom is that the jumbo rates will rise. This is because:

Starting in October, the federal government will start easing its support of jumbo loans as large as $729,750, which it began as an emergency measure three years ago. The new limits will vary by location, but will drop to $625,500 in top-tier markets such as New York, Los Angeles and Washington, D.C.

I believe Boston’s limit will also drop to $625,500, but check with your mortgage lender.

Getting a larger loan with a great rate will also require you to have an excellent credit score and be able to put down at least 20% at closing. If you can, you may be able to get a great, fixed-rate loan that you could have only dreamed about.

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