Luxury Market Left Out

Luxury Market Left OutThe Federal Reserve set out in January to lower fixedmortgage rate's by purchasing $1.25 trillion of bonds backedby home loans. The 30-year fixed rate for so-calledconforming loans that can be bought by Fannie Mae andFreddie Mac dropped to an all-time low of 4.71 percent inthe week ended Dec. 4, according to McLean, Virginia-basedFreddie Mac, the second-largest U.S. mortgage financier. Therate rose to 4.81 percent last week. The Fed purchases haven't affected the high end of themarket because they exclude so-called jumbo loans. Mortgagesabove the $729,750 limit set by Congress for the nation'shighest-priced markets cost almost 1 percentage point morethan conforming loans, according to Keith Gumbinger, vicepresident at HSH Associates, a mortgage-data company inPompton Plains, New Jersey. That's quadruple the historicspread. "There is no refinance market for you if you are underwaterand outside the Fannie and Freddie framework," Gumbingersaid. "High-end neighborhoods are all suffering from thesame problems of diminished income at a time when there islittle equity to work with."