Fannie Mae Supersizes You
Last week Fannie Mae and Freddie Mac made it easier for buyers in high-priced areas like New York to get big loans or re-fi their existing ones. Limits for federally backed loans in 70 counties across the U.S. have now been raised to $729,750, according to an article in the Wall Street Journal. The move…
Last week Fannie Mae and Freddie Mac made it easier for buyers in high-priced areas like New York to get big loans or re-fi their existing ones. Limits for federally backed loans in 70 counties across the U.S. have now been raised to $729,750, according to an article in the Wall Street Journal. The move is supposed to encourage lenders to to drop rates on jumbo loans (those over $417,000), which have soared above smaller loan amounts in the wake of the credit crunch. The loan-limit increase, however, will be short-lived: It’s set to expire at the end of this year. Still, this should do more to prop up the economy than tax rebate checks.
Fannie, Freddie Loan Limits Raised [WSJ]
Photo by *andrew.
The cover story of the latest Barron’s issue exposes the shaky finance of Fannie Mae. In the worst scenario it may need government bailout. Lifting of the jumbo loan limit? Fat chance.
http://seekingalpha.com/article/67748-fannie-may-fail-barron-s
I don’t get what 11:05 and 10:42 mean (although I am sure they could be right).
Do banks have the option to offer higher rates on bigger loans, even if they are now treated the same as smaller loans?
If so, why wouldn’t they do that now with loans at the upper end of the conforming range or charge “super jumbo” rates for extra big loans?
YIPPY!!! I’m going house hunting this weekend. Any leads on a 4-story brownstone in Park Slope for under $729K in move in condition?
10:42 is right. Fannie Mae and Freddie Mac are publicly traded companies that are being pummelled in the market right now. They are not cash rich and looking to lend even more. The fact that they are allowed to take bigger loans doesn’t mean that they are going to jump at the chance. I think the decrease in rates will not be huge.
I also wondered why this isn’t a permanent change. . .
obviously the limits should be dramatically higher in areas with higher property values. even 729 is very low for NYC
the limit should also float with some kind of index of values, so the same problem doesn’t arise down the road.
10:44 — we KNOW this part.
Surprised this -by far the biggest real estate story of the yr to impact NYC prices- hasn’t been discussed here yet since the news is about a week old. The rates on the loans which fall below $730k but above 417k (previous jumbo limit) won’t be as low as previous conformnig loans, but they should still average from 3/8th to 1/2 point lower than jumbos. That means on a $730k loan carrying costs go down frm approx $4200 to 3900. Good timing.
I am confused about this. I looked on a couple of websites including fannie mae. It said that the new limits only apply to 1 family properties. It also said that you cannot get the new conforming rate if you are taking cash out to pay a helc. You cannot only refinance what is on your existing primary mortgage. If I read it correctly, the 1 unit exception will be trouble for us brownstoners.
Party on.