Fannie Mae & Freddie Mac Loan Limits Remain UnchangedThe Federal Housing Finance Agency announced Thursday afternoon that the maximum conforming loan limits will remain the same for mortgages acquired by Fannie Mae and Freddie Mac. In most of the country, the loan limit will be $417,000 for one-unit properties but may be as high as $625,500 if the property is located in a high cost designated area.
The loan limits are set as a function of median home values in local areas and are calculated each year. When I entered the Atlanta area in 1992, the loan limit was $202,300. During the next 14 years, the loan limits increased as property values escalated, reaching the $417,000 threshold. During the real estate recession, we saw home values decline as much as 30%. My concern was that the loan limits would be decreased as property values declined, negatively impacting potential buyers borrowing ability. However, legislation has continued to maintain the current limit. Today’s announcement is positive for the housing industry. Perhaps this is another sign of a boost to our recovering market as home prices are increasing and mortgage rates are at a staggering all time low. Although low mortgage rates failed to boost new home sales in October, year-to-date sales are up 20 percent compared with 2011 volumes and there are growing signs of a turnaround in house prices.