Downgraded Prime Jumbo loans? Why should you care?

Date:February 27, 2009 | Author: | Category:Lenders

The reason that you should care is pretty simple:

  • If the amount of prime jumbo loans that are in trouble is going up (and I’d say $140 Billion is a few), then the appetite for jumbo mortgages on the investment side is going to get less.
  • That means that rates on jumbo mortgages are NOT going to get cheaper and will probably actually get more expensive.
  • Which will hurt the higher end of the market.

Have a good day!

Calculated Risk: S&P May Downgrade $140 Billion in Prime Jumbos

From Reuters: S&P may cut $140 bln of prime jumbo mortgage deals (ht Brian)

Standard & Poor’s said on Thursday it may downgrade 3,279 prime tranches of jumbo residential mortgage-backed deals with a market value of around $140 billion, after increasing its loss expectations for deals issued in 2006 and 2007.