Housing and Mortgage Reform are one of the themes discussed in all corners of Washington DC this week as the House and Senate Financial Services Committees consider winding down Fannie Mae and Freddie Mac. The proposals to “fix” housing and the mortgage business run largely in the direction of tighter Government Lending Guidelines to force the free market to take a larger role. One conversation with FHFA suggests that Conforming Loan Limits could be lower in 2014.
The current maximum conforming loan limit that will qualify for the upcoming QM program is $417,000. This is the maximum VA loan too. The Federal Housing Finance Agency (FHFA) is responsible for maximum income limits, under current legislation to make any adjustments, need to be done at the beginning of the year.
According to quotes from Mortgage Bankers Association President and CEO David Stevens – the MBA believes that the Conforming loan limits in most areas will go from $417,000 to $400,000. We currently have “high cost” areas identified across the country (and while none of them are in NC) those areas have Conforming limits of $625,000. This means that if you are in a high cost area – you only need to put a minimum of 5% into the transaction for your down payment. That High Cost “conforming” loan amount will likely go to $600,000 according to the MBA.
The concern is that this could force some home prices down, as buyers will have more attractive terms available for the loans that meet the new limits.
With mortgage interest rates rising this summer, we have seen a slow down in activity – and it was reported yesterday that home prices now appear to be leveling off. “The spike in mortgage rates associated with the possibility that the Fed will begin to wind down its asset purchase program later this month has dampened the improving trend in consumer sentiment regarding housing witnessed in our survey since the start of this year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
“The pause in positive momentum is consistent with slowing trends in home purchase contract signings and mortgage applications. Interest rate volatility will likely remain elevated, even after we have more clarity on the pace of the Fed’s tapering, due to concerns over the upcoming budget and debt ceiling debates as well as the crisis in Syria.”
Mortgage rates rose sharply in June when Fed Chairman announced that the Fed might begin being the major player in the Mortgage Market. As rates have continued going up – folks who were looking for a home in April – found they could no longer qualify. We’re one of a handful of Banks in NC offering the NCHFA Mortgage Tax Credit for First Time Home Buyers, and this incentive has been able to “neutralize” the impact of higher prices for many first time home buyers.
If you want to buy a house – and you need more information about how Conforming Loan Limits Could be lower in 2014 will affect you – please call Steve and Eleanor Thorne Or leave us a comment below, we try to answer all questions 919-649-5058 .