The explanations of what fuels the jumbo spread make sense, but not why it suddenly has blown out to record negative lows.
It has been slightly negative before, but never ~0.9.
“Average loan quality is higher on jumbos” is the worst explanation because the gap is roughly the same for the lowest most prime conventional borrowers.
One explanation that has changed with time is the GSE fees on conventional mortgages, which greatly increased 2009-2014. This outdated article is the best on this topic:
