How do interest rates for California jumbo loans compare to that of conventional loans?
Lenders base interest rates on risk. Therefore, the jumbo interest rate is usually higher than that of a conventional loan because the risks to the lender are higher. For example, if the buyer defaults, a luxury home is hard to sell quickly at its full value. Luxury homes are simply more vulnerable to market highs and lows. Because of this, California jumbo loan interest rates usually run between .25% and .5% higher, and have jumped as high as 1% higher during times of housing turmoil or high investor anxiety. Other factors that determine the interest rate include property types and mortgage amounts.
