First Internet Bank announced today that it has begun to offer jumbo loans. Jumbo loans are mortgages that exceed conforming limits ($417,000 in most parts of the country and as high as $729,750 in certain markets) and are not guaranteed by government-backed mortgage agencies Fannie Mae or Freddie Mac.
First IB management feels the time is right to offer jumbo mortgages on high-dollar value homes. Nationwide, jumbo mortgage originations were down an estimated 70% in 2008 over prior years – not due to lack of demand, but rather a lack of supply. Some lenders have stopped offering jumbo mortgages altogether, while others have priced themselves out of the market. Jumbo mortgage rates tend to be higher than conforming mortgage rates because lenders cannot sell the loans to investors and must keep them on their books. Historically, jumbo mortgage rates exceeded conforming loan rates by 20 basis points. Recently, however, the gap has widened to as much as 200 basis points, or 2 percentage points.
First IB offers “hybrid” adjustable-rate mortgages that carry a fixed rate for five or seven years and then reset annually to an adjustable rate. As of today, First IB is offering rates as low as 5.375% annual percentage rate (APR), with no points, for a five-year adjustable rate jumbo mortgage.
“We are confident there is unmet demand for jumbo loans in today’s market, particularly since the housing stability plan recently announced does not include relief for these borrowers,” said David B. Becker, President and CEO of First IB. “We are filling a void with an attractive jumbo mortgage loan product at a highly competitive rate. Of course, we are going to scrutinize these applications carefully. Borrowers still need to be credit worthy and the property value must be sustainable.”
About First IB
With $543 million in assets, First Internet Bank of Indiana (First IB, https://www.firstib.com) is the first state-chartered, FDIC-insured institution to operate solely via the Internet and has customers in all 50 states. Deposit services include checking accounts, regular and money market savings accounts with industry-leading interest rates, CDs, and IRAs. First IB also offers consumer loans, conforming mortgages, jumbo mortgages, and home equity loans and lines of credit. First IB is a wholly owned subsidiary of First Internet Bancorp (OTCBB: FIBP).
First Internet Bank of Indiana is an Equal Housing Lender.