Zillow Advice: Mortgage Types - How come jumbo mortgage rates are so much higher than regular mortgage rates? http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ Zillow Advice | Zillow Real Estate MortyV,Here it is in plain ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ MortyV,<br/><br/>Here it is in plain terms. If a <a href="http://www.zillow.com/directory/lenders/">lender</a> has $1,000,000 to lend out on mortgages, and wants to minimize their risk in today&rsquo;s volatile market, the question becomes: Would they rather give the entire $1mm to one person at a rate of 10% or lend $100K to 10 people at 5%? If they lend to 10 people instead of one, the risk for default is spread over more <a href="http://www.zillow.com/mortgage/">loans</a>. $1mm to one person is a much greater risk &ndash; therefore they want a greater reward.<br/><br/>Simply stated: Jumbo <a href="http://www.zillow.com/mortgage/">mortgages</a> are riskier than standard conforming mortgages. Hope this helps.<br/><br/>Benjamin Wed, 11 Feb 2009 21:40:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T21:40:00Z Forgot about conforming. ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ Forgot about conforming. All sold MBS. No or limited risk = Lower rates. Wed, 11 Feb 2009 22:40:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T22:40:00Z OK, here's how I see it IMHO:Today ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ OK, here's how I see it IMHO:<br/><br/>Today we have two varieties of jumbo.<br/>1. Jumbo = All <a href="http://www.zillow.com/mortgage/">loan</a> amounts &gt;$417,000.<br/>2. From 417,001&gt;$625,500 Max.&nbsp;depending on area = High-Balance-Conforming-Jumbo (Temporary Jumbo) - Agency Product packaged as a MBS.<br/><br/>On Agency <a href="http://www.zillow.com/directory/lenders/">lenders</a> have a certain percentage of their portfolio allowed for MBS placement. About 10%. When they are nearing their limit they begin raising&nbsp;rates. When they have reached their limit they price themselves out of this market or eliminate it.<br/><br/>The true jumbo #1 will be as competitive as the <a href="http://www.zillow.com/directory/lenders/">lender</a> has access to funds. Therefore rates can be all over the place. The main factor is they are not selling the loan or packaging it as a Security. They hold all of the risk.<br/><br/>To minimize risk they work with lower&nbsp;loan to value. Normally from 75% downward per certain established loan amounts As: 75%&gt;1.5M; 70%&gt;$2M; 65%&gt;$3M; 60%&gt;$5M; 55%&gt;$xxxM or? No Potfolio Lender&nbsp;is the same.<br/><br/>Today, a&nbsp;Porfolio 30F = 6.5% - 7.4% to 1M or 3.7% - $4.4% on a 1 yr&nbsp;Arm depending on ltv and credit.<br/><br/>Ok, that's all Folks!. ... Happy funding, Rudi Wed, 11 Feb 2009 22:37:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T22:37:00Z Basically all the investors ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ Basically all the investors "ran to the hills" once the <a href="http://www.zillow.com/mortgage/">mortgage</a> market started sinking.&nbsp; Our only relief is with conforming jumbo loans! Wed, 11 Feb 2009 22:34:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T22:34:00Z AZ,Why shucks and slap the ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ AZ,<br/>Why shucks and slap the grin off my face&nbsp; :-)&nbsp; Thank you for your explanation on the market place concerning mortgages.<br/> Wed, 11 Feb 2009 22:27:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T22:27:00Z Fewer Buyers "bidding" in ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ Fewer Buyers "bidding" in any sale.....= lower demand... to attract demand in a "return or investment" sale... it is about yield... TO even get anyone to consider these products..&nbsp; a much higher yield is currently required.. Couple that with the potential dollar losses on a <a href="http://www.zillow.com/homes/for_sale/fore_lt/">foreclosure</a> and it is surprising that they are in single digits.&nbsp; Keep rockin'. Wed, 11 Feb 2009 15:39:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T15:39:00Z NO!!!!!! But thanks for the ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ NO!!!!!! But thanks for the laugh. Wed, 11 Feb 2009 14:23:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T14:23:00Z Morty,I take it you are talking ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ Morty,<br/>I take it you are talking about real Jumbo <a href="http://www.zillow.com/mortgage/">loans</a> and not the Conventional Jumbo loans---anything over $494,500 in your area: Baltimore.&nbsp; If so, then it is a far different pool of money that normal Conventional loans.&nbsp; As Carl mentioned, many <a href="http://www.zillow.com/directory/lenders/">lenders</a> will hold them, thus straining their capital and exposing them to more risk.<br/><br/> Wed, 11 Feb 2009 14:23:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T14:23:00Z you mean to tell me that ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ you mean to tell me that with the limited marketability of such <a href="http://www.zillow.com/mortgage-glossary/Collateral/">collateral</a> has nothing to do with higher rates? Wed, 11 Feb 2009 13:36:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T13:36:00Z has nothing to do with the ... http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ <p>has nothing to do with the buyer pool for expensive homes. Fannie/Freddie don't buy jumbo <a href="http://www.zillow.com/mortgage/">loans</a> generally, and the few buyers that do buy them on the secondary market want higher rates.</p> Wed, 11 Feb 2009 13:26:00 GMT http://www.zillow.com/advice-thread/How-come-jumbo-mortgage-rates-are-so-much-higher-than-regular-mortgage-rates/198111/ 2009-02-11T13:26:00Z