>jumbo loan rates have tumbled, and are, in some cases, cheaper than conforming loans Here's a WSJ article¹ explaining the reason behind this weird inversion,

>jumbo loan rates have tumbled, and are, in some cases, cheaper than conforming loans Here's a WSJ article¹ explaining the reason behind this weird inversion, for anyone like me who was wondering: "how is that economically possible?" ¹ http://www.wsj.com/articles/SB10001424127887323893004579055283906962194 http://www.wsj.com/articles/SB100014241278873238930045790552... Here's the pertinent section in case anyone is hit with the paywall: Conforming loans have become more expensive because federal officials, in a bid to reduce the outsize footprint of Fannie and Freddie, have raised the fees those companies charge to lenders, which translates into higher mortgage rates. Meanwhile, interest-rate volatility has driven up yields on mortgage bonds issued by Fannie and Freddie as investors brace for a slowdown in the Federal Reserve's bond-buying program, which has included those mortgage bonds. That has boosted rates on conforming loans. Jumbo mortgages, meanwhile, are increasingly kept on banks' balance sheets, which means prices aren't usually set by bond markets. "Banks have more deposits than loans today, so the desire to put that money to work, as well as the fact that it's at a very low cost, allows us to make [jumbo] loans at a very good interest rate," said Mr. Blackwell.