Study Finds Lower Loan Limits Will Hurt Housing Recovery
Study Finds Lower Loan Limits Will Hurt Housing Recovery
Study Finds Lower Loan Limits Will Hurt Housing Recovery
Helpful
Tools
Mortgage
Calculator

Estimate your monthly payment for a home purchase or refinance
Auto Loan
Calculator

Determine how much car you can afford before buying
Learn About
Mortgage Loans

Learn about mortgage loans to find the one that's right for you
15 Year vs 30 Year
Loan Comparison

Compare payments between a 15 year and 30 year mortgage loan
Today's Mortgage
Rates

See today's current mortgage rates. Shop, compare and save.

June 28, 2011 (Chris Moore)

A new study by the National Association of Home Builders (NAHB) finds that the drop in some mortgage loan limits scheduled to take effect on October 1, 2011, will reduce housing demand and place downward pressure on housing prices.

The study says the new lower loan limits will result in more homes being above the “conforming” loan limit thus making them ineligible to purchased by government-sponsored enterprises (GSE) Freddie Mac and Fannie Mae or to be purchased by FHA-insured financing.

Such a scenario would likely result in more buyers purchasing homes that would likely require higher down payments, financing with higher mortgage rates, more stringent credit requirements and other less favorable loan terms.

“The lower limits will place a constraint on home buying in high-cost housing markets, such as those along the coasts and in California. It is the last thing we need in a housing market that is still struggling to get back on its feet,” said NAHB Chairman Bob Nielsen.

Under the Housing and Economic Recovery Act of 2008, the base limit for a loan through either two of the GSEs was $417,000, but could rise as high as $729,750, based upon a formula that allowed loan limits to rise as high as 125 percent of local median prices.

The formula change taking effect in October would lower the formula to 115 percent and cap the loan amount at $625,000. FHA-insured loans would see a similar drop although their lowest limit would be $271,050.

The amount of homes that would be affected are staggering. According to the report an estimated 3.63 million owner-occupied homes are currently priced above the conforming loan limit. If the rule is allowed to take effect, an additional 1.38 million owner-occupied homes would be placed above the limit. That would leave a total of just over 5 million homes that would no longer be eligible for financing through either GSE.

FHA-insured loans fare worse. There are currently 8.32 million owner-occupied homes priced above FHA loan limits, if the new rule is allowed to take effect, an additional 3.87 million homes would no longer be eligible for FHA-insured financing, leaving 12.2 million homes ineligible for FHA insured financing.

The study warns that downward pressure would extend beyond the homes directly affected by the new lower limits because first-time homebuyers and trade-up home sales are interrelated.

Tags: NAHB, GSE, Freddie Mac, Fannie Mae, housing demand, housing prices, loan limits, conforming loans, higher down payments, higher mortgage rates, stringent credit requirements

Source:
NAHB

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
HOW LOANRATENETWORK
LOAN CENTER WORKS
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Helpful Tools
Mortgage
Calculator

Estimate your monthly mortgage payment
Auto Loan
Calculator

Determine how much car you can afford before buying
Learn About
Mortgage Loans

Learn about the different types of home loans
15 Year vs 30 Year
Loan Comparison

Compare 15 year and 30 year mortgage loans
Todays Mortgage
Rates

See today's mortgage rates. Shop, compare and save.

June 28, 2011 (Chris Moore)

A new study by the National Association of Home Builders (NAHB) finds that the drop in some mortgage loan limits scheduled to take effect on October 1, 2011, will reduce housing demand and place downward pressure on housing prices.

The study says the new lower loan limits will result in more homes being above the “conforming” loan limit thus making them ineligible to purchased by government-sponsored enterprises (GSE) Freddie Mac and Fannie Mae or to be purchased by FHA-insured financing.

Such a scenario would likely result in more buyers purchasing homes that would likely require higher down payments, financing with higher mortgage rates, more stringent credit requirements and other less favorable loan terms.

“The lower limits will place a constraint on home buying in high-cost housing markets, such as those along the coasts and in California. It is the last thing we need in a housing market that is still struggling to get back on its feet,” said NAHB Chairman Bob Nielsen.

Under the Housing and Economic Recovery Act of 2008, the base limit for a loan through either two of the GSEs was $417,000, but could rise as high as $729,750, based upon a formula that allowed loan limits to rise as high as 125 percent of local median prices.

The formula change taking effect in October would lower the formula to 115 percent and cap the loan amount at $625,000. FHA-insured loans would see a similar drop although their lowest limit would be $271,050.

The amount of homes that would be affected are staggering. According to the report an estimated 3.63 million owner-occupied homes are currently priced above the conforming loan limit. If the rule is allowed to take effect, an additional 1.38 million owner-occupied homes would be placed above the limit. That would leave a total of just over 5 million homes that would no longer be eligible for financing through either GSE.

FHA-insured loans fare worse. There are currently 8.32 million owner-occupied homes priced above FHA loan limits, if the new rule is allowed to take effect, an additional 3.87 million homes would no longer be eligible for FHA-insured financing, leaving 12.2 million homes ineligible for FHA insured financing.

The study warns that downward pressure would extend beyond the homes directly affected by the new lower limits because first-time homebuyers and trade-up home sales are interrelated.

Tags: NAHB, GSE, Freddie Mac, Fannie Mae, housing demand, housing prices, loan limits, conforming loans, higher down payments, higher mortgage rates, stringent credit requirements

Source:
NAHB

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
HOW LOANRATENETWORK
LOAN CENTER WORKS
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
Helpful Tools

June 28, 2011 (Chris Moore)

A new study by the National Association of Home Builders (NAHB) finds that the drop in some mortgage loan limits scheduled to take effect on October 1, 2011, will reduce housing demand and place downward pressure on housing prices.

The study says the new lower loan limits will result in more homes being above the “conforming” loan limit thus making them ineligible to purchased by government-sponsored enterprises (GSE) Freddie Mac and Fannie Mae or to be purchased by FHA-insured financing.

Such a scenario would likely result in more buyers purchasing homes that would likely require higher down payments, financing with higher mortgage rates, more stringent credit requirements and other less favorable loan terms.

“The lower limits will place a constraint on home buying in high-cost housing markets, such as those along the coasts and in California. It is the last thing we need in a housing market that is still struggling to get back on its feet,” said NAHB Chairman Bob Nielsen.

Under the Housing and Economic Recovery Act of 2008, the base limit for a loan through either two of the GSEs was $417,000, but could rise as high as $729,750, based upon a formula that allowed loan limits to rise as high as 125 percent of local median prices.

The formula change taking effect in October would lower the formula to 115 percent and cap the loan amount at $625,000. FHA-insured loans would see a similar drop although their lowest limit would be $271,050.

The amount of homes that would be affected are staggering. According to the report an estimated 3.63 million owner-occupied homes are currently priced above the conforming loan limit. If the rule is allowed to take effect, an additional 1.38 million owner-occupied homes would be placed above the limit. That would leave a total of just over 5 million homes that would no longer be eligible for financing through either GSE.

FHA-insured loans fare worse. There are currently 8.32 million owner-occupied homes priced above FHA loan limits, if the new rule is allowed to take effect, an additional 3.87 million homes would no longer be eligible for FHA-insured financing, leaving 12.2 million homes ineligible for FHA insured financing.

The study warns that downward pressure would extend beyond the homes directly affected by the new lower limits because first-time homebuyers and trade-up home sales are interrelated.

Tags: NAHB, GSE, Freddie Mac, Fannie Mae, housing demand, housing prices, loan limits, conforming loans, higher down payments, higher mortgage rates, stringent credit requirements

Source:
NAHB

HOW LOANRATENETWORK
LOAN CENTER WORKS
FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT
CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.