An unexpected side effect of the pandemic has been the extraordinary rise in home prices during 2021. This trend has increased the need for jumbo loans in 2021, spurring the largest issuance since 2007.
While the mortgage rate dropped to a record low in 2020, the jumbo-conforming mortgage rate spread widened. In other words, jumbo loans were relatively more expensive than conforming loans.
Spread highest in last 7 years after adjusting for risk, location, and loan-size The COVID-19 pandemic has had a big effect on the mortgage market.
Increased Conforming G-Fee, Higher Jumbo Credit Standard, and Risk-Based Pricing Historically large-balance mortgage loans, known as ‘jumbo’ loans, had a higher interest rate than conforming