Jim the Realtor noticed in June that jumbo mortgage rates had gone cheaper than conforming.
At the time, I thought it was due to temporary dislocations in the Agency MBS market because of the violent move in Treasury rates. But the anomaly persists.
Another explanation is that there are relatively fixed transaction costs (documents, appraisals, insurance, notary, etc.), and the larger loan balances give banks more value to spread those costs across. For the same reason, you can often easily get a no-cost refinancing on a $400,000 loan, but not on a $100,000 loan.
But the really good news here is that government guarantees via Fannie and Freddie are increasingly irrelevant. With good credit scores and down payments, banks are willing to lend without government guarantees at better rates than with government guarantees! Good riddance to those corrupt behemoths, and may the bankrupt FHA follow them soon after.
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