Jumbo Loans Spell Relief

Washington Times (01/29/08); Hill, Patrice
Economists are optimistic that language included in the stimulus package to raise the limit on jumbo loans will lead to a major refinancing boom this year. The $150 billion package of tax cuts and rebates includes a provision to increase the conforming loan limit from the current threshold of $417,000 to as high as $729,000 in costly housing areas such as New York and California, which would make jumbo loans cheaper for buyers and more marketable for investors. Richard Berner, chief economist at Morgan Stanley, says jumbo loans account for about one-fifth of all outstanding mortgages; and he expects consumers to save more than the record $31 billion windfall recorded during the 2003 refinancing wave. "It could do a lot to unfreeze the mortgage market," agrees John Rutledge, an economic consultant and former Reagan economic adviser.