Jumbo Mortgage Rates are currently 2% higher than conforming interest rates. It was only about one year ago when this spread was as little as 1/4 percent. The reason for this is that there is no secondary market for jumbo mortgages these days. This means that if a bank makes a jumbo mortgage there is no longer a place to sell this loan after it closes.
The only lenders offering jumbo mortgage these days are portfolio lenders that are providing their own money and keeping the mortgage. Because this money now becomes long term committed money by the bank, they are now charging an exorbitant premium.
I don't see this changing in the near future. I would recommend going with an adjustable rate mortgage (ARM) if you can accept the risk of a possible rate increase in the future for the benefit of an interest rate that can be as much as 1 - 2% lower than a 30 year fixed jumbo mortgage rate.
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