Conforming - Jumbo Spread

The difference in rates between a conforming loan amount ($417,000 today) and a jumbo loan (anything over $417,000) has historically been .25%-.5%; since August 2007 it's been hovering around 1% or more.

With the conforming limits about to be raised to just under $730,000 in high cost areas, the question becomes what will happen to the spread between the now higher conforming limit and the now larger jumbo loans.

It is widely hoped that spreads will narrow, but many analysts feel that the change in conforming limits will actually have a negative impact on loan amounts above $730,000, due to the perceived higher risk.

This means that the high end homeowner or home buyer whose home is in the $915,000+ range could end up paying a premium in interest rate to own a premium home.