Yesterday was a rather drab day in mortgage circles -- not much happened and mortgage rates idled.  The bigger story was how liquidity appears to be slowly returning to some areas of the beaten-down mortgage market.

Specifically, liquidity is returning to prime, fixed-rate, full documentation jumbo loans and pricing appears to be improving (slightly).

The "prime" designation loosely correlates to a salaried employee with a credit score of at least 720.  This class of borrower is a much lower risk than a sub-prime borrower who is generally categorized as having a credit score below 620.

The higher a homebuyer's credit score, the more likely he is to make on-time mortgage payments.

Jumbo loans differ from Fannie Mae/Freddie Mac conforming loans based on the amount borrowed.  Jumbo loans meet the following loan size criteria:

• Home, condo or townhome: Over $417,000
• 2-unit: Over $533,850
• 3-unit: Over $645,300
• 4-unit: Over $801,950

As more investors express a willingness to buy jumbo mortgage bonds, we can expect jumbo mortgage interest rates to improve, and we'll maybe even see that improvement spill-over into other product types -- including sub-prime loans.

We'll have to wait and see.