I’m surprised, but there were unintended consequences to the Federal Reserve’s massive quantitative easing programs.
One consequence is in the mortgage market. Borrowers are paying a rate that’s about 0.6% higher than it should be.
Traditional mortgages meet federal guidelines and are less than $647,200 in most cases. Jumbo home mortgages are above that limit.
It makes sense that jumbo mortgages should be more expensive. They don’t meet federal guidelines so they can be riskier.
Until early 2022, the rate was consistently 0.2% to 0.3% above traditional mortgages. That reflects risk.
In early 2022, jumbos dipped below traditional mortgages.
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