With the housing market showing signs of recovery and increased speculation about rising interest rates, prospective higher-end buyers may want to consider pulling the trigger on that purchase of a Chicago home.
The banking industry is bracing for a potential rate hike anywhere from 2 to 4 percent during the course of the next 12 to 24 months. That kind of jump will have big-time implications for those looking to finance a luxury Chicago home and anyone else in need of a jumbo loan.
Jumbo loans are loans with an amount greater than the conforming loan limit established by the federal government. This year, the conforming loan limit is $417,000 throughout most of the United States. The threshold is higher in Alaska, Hawaii, Guam and the Virgin Islands.
The onslaught of higher rates could deal a significant blow to those considering a refinance or looking at a high-end Chicago real estate purchase. In fact, some industry experts have suggested this year may represent the best rate opportunity of the next 10 years.
That wouldn’t be the first overstatement from the banking industry in recent years.
But, at the same time, it’s difficult to imagine that jumbo borrowers or homeowners contemplating refinance will find more favorable conditions in 2011 and beyond.
Rates for fixed 30-year jumbo mortgages have hovered in the last few weeks, up recently to 5.82 percent. Jumbo refinances had the same rate, which was up from 5.64 percent the week before.
The rate for a fixed 15-year jumbo was about 5.10 percent, up slightly from the week prior.
If you’ve been weighing the real estate environment before making your Chicago real estate purchase, time is running short.