GSEs to Lower Loan Limits in 2014

In an effort to reduce the Governments exposure to the mortgage market, FHFA is proposing to reduce the current conforming loan limit to 2008 levels.

Based on the Affordability index, some would say that there is a housing bubble.  They way the calculate this is quite interesting and we think you’ll get a kick out of it.  So here we are getting more news of a bubble from what would be credible sources.  We have to tell you though, we just don’t see it.  With rates rising and loan limits dropping we believe we’ll see a natural cooling off, but not a bubble.  Your thoughts listed below would be appreciated.

On the good news front it looks like rising prices have pulled 2.5 million people above the waterline with their properties.  This is according to a recent CoreLogic report.  This is a great reason to start talking to people in your database about your business again.  Remember to touch base with them through the end of the year.

And finally, FHFA is going to take measures to lower the existing elevated conforming loan limits offered by Fannie Mae and Freddie Mac.  They want to bring the maximum conforming loan amount back to the 2008 level of $417,000.  The good news here again is it’s a motivation factor for your clients that might be sitting on the fence.  Will it have a huge impact on the industry as a whole?  We don’t think so.  Jumbo non-agency money seems to be doing well right now and should be able to pick up the slack.  In fact Jumbo rates are currently about the same or even better then conforming rates.  We believe Jumbo rates will start to rise a bit soon based on this news.

Well we hope you all have a wonderful day and we’ll see you tomorrow.

Frank and Brian


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