There is no guarantee that the rates on jumbo-conforming loans will be low enough to attract borrowers. Rates will be set by the market; not the government, not the banks. I believe the most likely outcome will be premium price add-on to jumbo-conforming mortgage rates so rates end up somewhere between conforming loan rates and jumbo mortgage rates.  Depending on the median cost of houses in each metro area, the jumbo-conforming limit can be as high as $729,750.

Fannie Mae's Guidelines for Jumbo-Conforming Loans:

• Jumbo-conforming mortgages have stricter loan-to-value (LTV) limits. For the purchase of your principal home, your LTV is 90 percent of the home's value when you finance with a fixed-rate mortgage, and 80 percent LTV for an adjustable-rate mortgage.
  
  If you're refinancing into a Jumbo-conforming mortgage, your LTV is 75 percent of the home's appraised value. The combined amount of all mortgages, including home-equity debt, can't exceed 95 percent of the appraised value. The LTV ratios for refinances apply to both fixed-rate and adjustable-rate mortgages.
  
• There is only a "limited cash-out refinance."  This means that you can only borrow a little bit more than your current balance to pay closing costs or borrow a round number (i.e., borrow $740,000 instead of $738,040).  You will not be able to do a cash-out refi to pay off a home-equity loan or home-equity line of credit, or to walk away from the closing table with a check for more than $2,000.
  
• The minimum credit score for a Jumbo-conforming mortgage is 660 or higher. If you are going to borrower more that 80 percent of the home's price, the minimum credit score is 700.
  
• For second homes and investment properties, the maximum LTV is 60 percent with a minimum credit score of 660.
  
• Only a one-unit single-family house, condominium or PUDs are eligible. All multi-unit properties are not eligible for Jumbo-conforming mortgage financing.
  
• For refinancing with a Jumbo-conforming mortgage, if you have a home-equity loan or home-equity line of credit, the second-lien holder must agree to subordinate and remain in the second lien position.  If they refuse to subordinate to remain in the second-lien position, the borrower will either be forced to pay off their home-equity debt or forgo refinancing.
  
• You can't have had any late mortgage payments in the last 12 months. A late payment is defined as being reported 30 days or more late to the credit agencies.
  
• The debt-to-income ratio (DTI) is maxed at 45%. This means if you have a gross income of $200,000 a year, the total debt payments can't exceed 45% of $200,000, or $90,000. All ARMs are qualified based on the fully indexed rate.
  
• All Jumbo-conforming mortgages will be fully documented.  Also, appraisals will be a full walk through.
  
• If the LTV exceeds 80 percent, you have to buy mortgage insurance (MI).
  
• Construction-to-permanent financing is not allowed with jumbo-conforming financing.

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