Jumbo mortgages made at the six largest U.S. banks accounted for 24 percent of all mortgages in 2015. That’s an increase from 21 percent in 2014. All of these jumbo mortgages were larger than $417,000. Since 2008, they have become more popular with the larger banks, including Bank of America, J.P. Morgan Chase, Citigroup, PNC Financial Services Group, SunTrust Banks, and Wells Fargo.
Last month, the Wall Street Journal outlined pressures placed on large lenders to make jumbo mortgages – pressures that these big banks have been giving in to. In 2012, about 12 percent of mortgages made by these six banks were jumbo mortgages. Doubling the number of jumbo mortgages made over the past two years has brought many side-effects. One of these is that fewer mortgages have been made to Hispanic and black borrowers, two demographics that rarely qualify for jumbo mortgages.
Large banks like to make jumbo mortgages because the borrowers who qualify are those with strong credit scores, can afford to make large down payments, and rarely default. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips. Also, they don’t depend on banking from any federal programs. This meant that banks did not lose money on jumbo loans following the financial crisis, as they did on other types of mortgages.
The fact that banks make a decent profit from jumbo mortgages has made them attractive to lenders with interest rates being lower this year.
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