While the secondary mortgage market for jumbos is doing worse than a year ago, it could be good news for borrowers, according to an article in The Wall Street Journal.
The article stated that now only 2.3% of all jumbo mortgages originated in the first half of 2014 have been securitized, a significant drop from the peak of 49.3% in 2005.
Now, instead of selling mortgages on the secondary market, large lenders are keeping them on their books and reaping the profits themselves.
Lender enthusiasm for jumbos—loans that exceed $417,000 in most places and $625,500 in high-price areas—means that borrowers are sometimes offered lower interest rates than they'd get with a government-backed conventional loan, says Cameron Findlay, chief economist for Discover Home Loans. Because they can keep the loans in their portfolio, jumbo lenders may have more flexibility with qualification standards, so high-dollar borrowers may get slightly better terms on down-payment minimums and debt-to-income ratio requirements.