Reduced Loan Limits, Analysts Expect Little Impact on Market

The Federal Housing Finance Agency raised conforming loan limits in February of 2008, but now they are expected to cut back; the agency is discussing reducing loan limits on mortgages guaranteed by Fannie Mae and Freddie Mac in an effort to increase buyer demand previous to the deadline, according to Housing Wire.


The deadline, which is expected to be this October, was initially expected to create increased sales, as well as an opportunity to recover from the low home values that have recently plagued the real estate market, but the anticipated benefits are likely to be short-lived, say some analysts.

Other analysts found that the data indicated only a slight increase in prices.

“I think prices will rise for homes between the old and new limits,” Villacorta, senior statistician at data analytics firm Clear Capital, said to Housing Wire. “In that range, it certainly could happen. But, really, to get a better gauge is to see how many buyers are really in this segment. In that range, it’s a very small percentage.”

“You would be hard pressed to base another drop in prices on any decrease in the buyer pool or the conforming loan limits alone,” Villacorta continued. “There’s already a significant amount of factors causing the drop.”