With elevated conforming loan rates, one analyst noted some jumbo loan rates beating GSE rates
Even luxury housing markets have felt the pinch of elevated mortgage rates and high prices. However, as rates have declined over the last couple of weeks, there could be some movement in this market.
With rates dropping below the mid-sixes, there is some growing optimism. In addition to conventional rates dropping, jumbo loan rates have occasionally also dipped even lower than the rates offered by Fannie Mae or Freddie Mac.
John Walkup (pictured top) is the co-founder of UrbanDigs, a real estate data analytics company. He notes that while there have been times when the jumbo rate has been higher, he has recently seen some come in lower than conforming loan rates.
“It's been particularly painful, especially because you have a lot of units,” Walkup told Mortgage Professional America. “The median price here is north of a million dollars. Even for the basic apartment, a lot of these are looking at the jumbo rate. There's definitely a spread between the conforming and the jumbo, and the jumbo is often higher. Sometimes you'll see that a jumbo loan crosses below the conforming rate.
“To me, that’s a signal like, maybe some of the risks out there for lending influencing that spread are sort of dissipating in banks' minds, and they're willing to look at a lower rate because there's a little less risk on the table.”
Relief on the horizon
For markets where non-conforming loans are more common, seeing the jumbo rate at or below the conforming rate is a hopeful sign, according to Walkup.
“We saw that last week, a little bit of a teaser that that jumbo rate was coming down,” he said. “The jumbo rate crossed down a little bit below that conforming rate last week. Hopefully, it’s a little bit of an indication that there is some relief on the horizon, especially in the larger cities, where that median price is a little bit elevated compared to other markets.”
Damon Germanides of Insignia Mortgage taps portfolio lenders—community banks, credit unions, jumbo loans and private-bank relationships—to beat mid-six agency pricing.https://t.co/S30EZ2ipJZ
— Mortgage Professional America Magazine (@MPAMagazineUS) September 5, 2025
He notes that a lot of banks and non-QM lenders are willing to take risks on jumbo loans as long as customers are willing to build a relationship with the lender.
“Credit to the banks, because, after the Great Recession, a lot of the balance sheets and lending standards really tightened, and I think we've avoided a lot of issues simply because of that,” Walkup said. “And when you look at the jumbo right now, and the kind of hurdles you have to go through, a lot of these rates are attractive because you have a relationship with the bank.
“It's not like some ninja loan, ‘Hey, we'll give you whatever you want.’ They've done a lot of the know-your-customer work. So the lending is safer. It's a better deal for the bank. It's a better deal for the customer.”
Monitor the trends
Walkup said one key for mortgage brokers in these luxury markets is to monitor property types and price levels, and really understand the differences in the market itself.
“Stay on top of the trends as they apply to property types and price levels, because it's certainly not a one-size-fits-all,” he said. “We're obviously seeing that across the board nationally, but it also applies very locally. I can tell you that the Manhattan luxury condo market is completely different than the Manhattan luxury Co Op market. Then, if you look at the sub-luxury, the co-ops in the town, they're all doing different things. It really helps to understand what those dynamics are.”
Because these markets can be so tricky, Walkup said brokers really need to do their homework when it comes to comps on properties. These can vary wildly, not only from one neighborhood to another, but also from a few months ago to now.
“The comps might be a little bit tricky,” Walkup said. “You might see comps coming in from earlier in the year, because there's always that lag. In New York, there's a three- to four-month lag between the time something closes, the contract is signed, and it appears in the closing record. If it were late August, we might be looking at closings coming in from late May, which those deals may have been signed in early April.
“You could be seeing prices that diverge a little bit from the comps, in the sense that they might suggest that this market is moving. The market environment now, that market sentiment, is a different market than it was six months ago. April was a bit of a shift for the non-luxury market, as opposed to the luxury market. We're in a slightly different market than we were five months ago.”
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