JPMorgan Chase tightened mortgage terms on jumbo loans for co-ops and condominiums in Manhattan amid declining buyer demand, Bloomberg reported on Friday.

Chase announced that starting this week, he will limit jumbo loans to 70% of the sale price. The new standards apply to loans over $ 765,600 unsecured by Fannie Mae and Freddie mac – which represent 95% of the Manhattan market, according to the report.

JPMorgan’s new loan-to-value restrictions will apply to all Manhattan apartments, including resales and co-ops, many of which are older, relatively affordable units that price-sensitive buyers look to first.

A spokesperson for JPMorgan confirmed that the new loan terms are due to “current economic conditions”.

Jonathan Miller, real estate appraiser and consultant at Miller Samuel Inc., told HousingWire that it was “unusual” for one of New York’s boroughs to be honored.

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“Manhattan is one of the most expensive housing markets in the United States, and a lot of mortgages are huge,” he said. “But Manhattan’s market has been the slowest to recover because its people are the wealthiest and most mobile in the city. Many were able to leave with the COVID lockdown. “

Miller added that the lack of a vaccine discouraged many people who initially left from returning to Manhattan.

“It weakens the market as prices have come down,” he said. “Unlike compliant lenders, many jumbo loans are held in portfolios and future economic conditions are currently uncertain. “

Melissa Cohn, Lender and Mortgage Broker with William Raveis mortgage, added that an influx of condominium inventory in New York City has created “a perfect storm.”

“Prices have fallen by a higher percentage in New York than anywhere else in the country,” Cohn said. “Chase and other lenders have chosen to restrict the value of the loans in order to protect themselves.”

Cohn added that many lenders were following similar paths during the pandemic: raising maximum credit score requirements, lowering maximum loan amounts, requiring more cash reserves, and even limiting or eliminating home equity loans.

In March, HousingWire asked “Has the non-QM just disappeared from the market? »As many of the largest lenders specializing in ready borrowers outside the category of qualified mortgages were in suspension due to market uncertainty. The two main holdouts were Angel Oak Mortgage Solutions and Maintenance of the citadel, who stayed in the non-QM lending industry for as long as possible before finally taking his leave.

But non-QM loans made a comeback in May, as several companies that had halted non-QM lending in March returned to the market, including Mortgage, GreenBox loans, and Angel Oak.