The fall off in jumbo real estate loans is a negative indicator for a housing recovery.   Jumbo loans are required for properties that cost more than $400,000.  Although $400,000 sounds like a lot for a home, it isn’t a lot of money in some area’s of the country.

The demand for jumbo loans has fallen over 70 percent.  And, bankers and real estate brokers say the lack of demand for properties over $400,000 has a significant impact on the economy and housing market.

It is estimated that the decline in the jumbo loan market has a $42 billion impact on the economy.  In addition, it is a looming sign that the upper end of the housing market isn’t moving, creating a road block at the top of the market that filters down.

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1. Neophyteblogger says:

   July 21, 2009 at 6:19 am

   Yes, its true that Jumbo loans are being frowned upon and the Obama administration is unwittingly hurting banks and other lending institutions; without the Fannie Mae and Freddie Mac guarantee there is no way one can expect lenders to put in so much money on property that may well go into foreclosure.