The credit union said it is lowering the jumbo rate because many of the credit union's members—the U.S. Armed Forces and their families—live in geographic areas where home prices are on the rise and purchasers are becoming challenged to find homes for sale at a price below jumbo mortgage thresholds.
It noted that prices in some of its top markets “have increased significantly in the past three months.” It cited Washington, D.C., as an example, noting that year-over-year in such areas sales prices have risen for four-bedroom homes more than 24%.
"Rising home prices, especially in our core markets, are making it more difficult for creditworthy homebuyers," said Katie Miller, vice president of mortgage products at Navy Federal, in a press release. "We are responding to our members' needs by keeping our jumbos in line with our conforming mortgage rates."
"Price appreciation has been significant in many markets, and several factors are at play," says Alan MacEachin, the credit union's corporate economist. "The supply of homes on the market remains tight while demand continues to grow. The economy continues to improve, the jobs market is strengthening, and mortgage rates, while off their record lows, remain attractive by historical standards. Down the road, however, potential changes such as a reduced federal government role in housing finance and the eventual dissolution of Fannie Mae and Freddie Mac could increase home loan borrowing costs."
The credit union said that despite the changes in the housing market, its mortgage originations are still at an all-time high with nearly $8 billion in loan production originated through July. In addition to jumbo mortgage loans, VA and other conventional loans are part of the portfolio. Navy Federal also makes $2,500 available to members to help with closing costs on purchases, and the loans allow up to 6% of the purchase price to come from the seller.