The chances the Federal Housing Finance Agency will raise the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2017 is high now after meeting one certain condition.
Despite predictions that the loan limits would rise for 2016, the FHFA announced in November of 2015 that the conforming loan limits would remain unchanged for much of the country.
Now that a year has passed, it’s time again for the FHFA to announce what the limits will be for next year, and according to at least one industry expert, the signs point to yes.
Raising the conforming loans limits for mortgages to be acquired by the GSEs depends on one fact. According to the FHFA, the Housing and Economic Recovery Act of 2008 established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. And now home prices have.
The FHFA defines pre-crisis levels as the level of the expanded-data HPI in the third quarter of 2007, and according to the Mortgage Bankers Association, in the second quarter of 2016, the FHFA’s house price index was almost identical to the level of the index in the third quarter of 2007.