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The Federal Housing Finance Agency (FHFA) announced on Tuesday that it will increase the loan limits for loans purchased by Freddie Mac and Fannie Mae by 5.2% by 2025, as housing prices continue to rise in the US.
The new conforming loan limit (CLL) value for a single dwelling unit will be $806,500 next year, an increase of almost $40,000 from the 2024 base limit.
The FHFA has announced that it will raise mortgage loan limits for Fannie Mae and Freddie Mac by 5.2% by 2025. (Justin Sullivan/Getty Images/Getty Images)
However, in the most expensive areas of the country where 115% of the median home value exceeds the basic loan limit, the loan limit is 150% higher. Therefore, the loan amount for a single-unit home in those areas would be $1,209,750, which is 150% of $806,500, FHFA said.
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The FHFA adjusts loan limits for federally subsidized businesses Freddie and Fannie each year to reflect changes in average home prices, which rose 5.21% from the third quarter of 2023 to the same quarter this year.
Bahnsen Group managing partner David Bahnsen discusses market volatility and analyzes the real estate market on ‘The Big Money Show.’
Home prices have risen in the US in recent years, along with mortgage rates, resulting in an ongoing housing affordability crisis.
Freddie Mac’s latest Primary Mortgage Market Survey, released last Thursday, showed the average rate on the benchmark. 30 year fixed mortgage increased to 6.84% compared to last week’s figure of 6.78%. The average rate for a 30-year mortgage was 7.29% last year.
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Also, on Tuesday, the S&P CoreLogic Case-Shiller US National Home Price NSA Index reported that home prices rose for the 16th time in a row in September, and are now 51% higher than at the beginning of the pandemic.
U.S. home prices hit a record high for 16 consecutive months, according to the (Liu Guanguan/China News Service/VCG via Getty Images/Getty Images)
“When higher prices are combined with ongoing mortgage rates and adjusted for inflation, the mortgage payment, which includes only principal and interest, is now 82% higher than before the pandemic,” reports CoreLogic’s chief economist, Selma Hepp, noting that this figure we are not the same. they include rising property tax and insurance costs.
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“Because of that, it’s not hard to see why the housing market is in trouble,” Hepp said.
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