From (Big) Premium to Discount
Three years ago — give or take — there was a HUGE premium for a jumbo mortgage (over $417k in most markets) relative to a conforming one.
As I recall, the spread was something like 150 basis points.
Translation: when conforming rates were 4%, jumbo’s were at 5.5% — assuming you could find a lender offering jumbo’s.
Jumbo for 3.25% (Not a Typo)
Fast forward to today.
According to Edina Mortgage’s Keith O’Brien, some jumbo’s can now be had for 3.25% — a full quarter point below the best conforming rates.
The explanation?
That 3.25% looks good to investors faced with sub-2% yields on 10 year U.S. treasuries — and near-0% on money market funds, CD’s, and savings.
I’d call the latter “low-yielding,” but “no-yielding” is more like it.
