Why Lenders Love the $2.5 Million Home Loan
Home loans from $1 million to $5 million were the fastest growing part of the jumbo market in January, according to purchase application data from the Mortgage Bankers Association. Wealthy borrowers are seeking even bigger loans this year while luxury housing prices rise and lenders lure them with competitive terms.
As first-time homebuyers struggle to qualify for mortgages in a market that’s shrinking after the housing collapse, lenders are providing more multi-million dollar loans to Americans who pose less risk. These borrowers are using the loans to purchase high-end homes in cities such as San Francisco and Miami, where prices have been climbing.
“We’ve seen strong appreciation in most of the coastal markets,” said Brad Blackwell, portfolio business manager at San Francisco-based Wells Fargo & Co., the biggest jumbo lender. “The price rise will move more homes into the category that would need a larger loan.”