Jumbo collateral has the ability to prepay at fast speeds going forward, analysts at JPMorgan said in a recent report.
They said that the refinancing efficiency in Jumbos is borrower- and lender- driven. Mortgage bankers are currently at full capacity and would much rather process Jumbos instead of conforming applications. Additionally, wealthy borrowers have had depressed stock portfolios over the last three years and are actually quite eager to save on mortgage costs by refinancing more aggressively. This desire has, in turn, resulted in faster prepayments on Jumbo product.