UPI reports that on October 1, the temporary higher loan limits passed on FHA loans expired, moving the top finance amount from $729,750 down to $625,500. “NAR (National Association of Realtors) is continuing to working closely with members of Congress and a coalition of industry partners to have the higher loan limits reinstated as soon as possible. Mortgage availability remains a real concern since the private market has yet to return; and while the housing market recovery is still soft, NAR firmly believes that lower loan limits will only further restrict liquidity in mortgage markets,” said NAR Senior Vice President and Chief Economist Lawrence Yun. While FHFA officials say the impact will be modest, Yun countered by saying “Higher loan limits have been crucial to helping the housing market recover. Reverting to lower loan limits will impact 669 counties in 42 states and the District of Columbia, with an average loan limit reduction of more than $68,000. NAR estimates that 5 percent to 10 percent of consumers will face unnecessary higher mortgage rates as a result of this change, at a time when housing is still in recovery.” Twenty-six U.S. states had no purchase by the GSEs of the higher-balance loans. The National Association of Home Builders (NAHB) said the counties affected by the changes in the FHA limits contain nearly 60 percent of all owner-occupied homes; the counties affected by the Fannie-Freddie changes contain nearly 30 percent of all owner-occupied homes.
