When it comes to jumbo mortgages, there’s probably nothing more bizarre than their interest rates.
Interest rates for jumbo mortgages aren’t like interest rates for other mortgage types.
For other types, interest rates trend with Wall Street and follow the path of bonds known as mortgage-backed securities, which are bought and sold like stocks.
They change price frequently.
For jumbo mortgages, interest rates change less often.
Sometimes, interest rates for a jumbo loan won’t change for a day, or for a week, or for longer. This is because interest rates for jumbo loans don’t track with Wall Street.
They change at the lender’s discretion.
There’s a good reason for that, too. Jumbo home loans are neither government-backed nor government-supported, which means that when a lender makes a jumbo-sized loan, they’re doing it on their own, without a federal backstop.
It’s why jumbo loans are sometimes called portfolio loans — they stay in the lender’s portfolio of loans and other investments. And, whichever interest rate the lender deems appropriate is what the lender will assign to its loan.
Jumbo loan interest rates can be low at times — much lower than non-jumbo loans. Other times, they can be higher. They’re always fair, though, because the interest rate on a jumbo loan reflects the risk the lender takes by making you the loan.
Lower-risk loans get access to lower interest rates.
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