The Federal Housing Finance Agency said last week that the conforming loan limits for Fannie Mae- and Freddie Mac-acquired mortgages will remain at $417,000 for one-unit properties in most areas across the country.
The Housing and Economic Recovery Act of 2008 sets the maximum loan limit that Fannie and Freddie are allowed to set for mortgage acquisitions and requires annual adjustments to the limits to reflect changes in the national average home price.
In more expensive areas like Los Angeles and New York City, the cap will remain set at $625,500.
The limits were increased in 2008 to help maintain liquidity in the mortgage market, and the FHFA had considered lowering them as the housing market recovered to allow private capital to support more home loans, Reuters reports.
In announcing its decision, the FHFA said the housing market had not shown enough improvement to warrant lowering the limits, and the agency is expected to wait until next year to consider a future reduction.
The National Association of Realtors applauded the decision, after cautioning in September that lowering the loan limits could eliminate the possibility of homeownership for many creditworthy borrowers—in particular, first-time homebuyers who are less likely to meet the minimum 20 percent down payment requirement, according to HuntingtonNews.net.
“There is already enough turbulence in the regulatory environment for mortgage lending,” NAR President Steve Brown said, HuntingtonNews.net reports. “In January 2014, many changes stemming from the Dodd-Frank Act will go into effect, including the ability-to-repay requirement. In addition, risk retention regulations remain in flux, including the definition of a Qualified Residential Mortgage. Lowering loan limits at this time would create even more confusion and uncertainty, and we would run the risk of reversing the progress that’s been made in the economic recovery.”