Rates Jump to 125% of HUD published median prices

     FHA, Fannie Mae and Freddie Mac have increased their loan limits to 125 percent of the HUD published median prices, with a floor of $271,050 and $417,000, respectively, not to exceed $729,750.

        National Association of Realtors’ president Dick Gaylord reports that these loan limit increases should lead to an infusion of capital into the mortgage market, which should result in lower interest rates across the board.   In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages.

        As NAR research points out, increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market.

        An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.

Jane Neilson, CBR

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