Lenders luring jumbo borrowers for other bank services

Banks are on the hunt for jumbo loan customers in order to win them over as clients for other banking services by offering lower interest rates on high-dollar loans.

According to CNNMoney, many jumbo borrowers don’t have to worry about a large down payment or mortgage insurance.

For the last several months, interest rates on jumbo loans-mortgages that are $417,000 or more (or $625,000 or more in high-priced markets-have been lower than what average borrowers pay. For example, the average rate on jumbo loans last week was 4.24 percent compared to 4.36 percent for a 30-year, fixed-rate conventional mortgage, according to the Mortgage Bankers Association.

In some cases, lenders also have reduced their down payment requirements as well, requiring as little as 10 percent, which is about half the normal rate. Some lenders are waiving the private mortgage insurance requirement, too.

Jumbo borrowers tend to have better track records in repaying their loans and have lower default rates, so more banks are willing to take the gamble on them. Once “in house,” borrowers are offered checking and savings accounts and other services.