U.S. housing market suffers another blow this past weekend

New York /
Oct.October 03, 2011 09:40 AM

Already on life support, the housing market endured another body blow this weekend when the cap on mortgages eligible for federal loans was reduced. Only loans of $625,500 or less, compared to the previous limit of $729,750 for the country’s most expensive markets, will be eligible for the lower down payments and interest rates promised by government loans.
Those jumbo loans that exceed the limit will become more expensive.

Just 2 to 4 percent of the market will be impacted by the change, according to CNN, or about $30 billion of the $600 billion worth of loans Fannie Mae and Freddie Mac acquired in 2010. But with home prices continuing to plummet and private lending still tight, experts wonder why the government is taking any step that could further weaken housing. Rates for those loans, which will undoubtedly be harder to secure without government help, could rise by as much as 0.5 percentage point.

The move is part of an effort to slowly remove the federal government from the mortgage market. It will give private banks an opportunity to capitalize on the higher yielding jumbo loan market — if they’ll loosen their purse strings and lend. [Reuters] and [CNN]


Related Articles

arrow_forward_ios
The Collective's Reza Merchant and 1215 Fulton Street in Bedford-Stuyvesant (NLA, The Collective)
Co-living startup The Collective to lose another Brooklyn development project
Co-living startup The Collective to lose another Brooklyn development project
Top October loans: Cash cows, big buys, foreclosure avoidance
Top October loans: Cash cows, big buys, foreclosure avoidance
Top October loans: Cash cows, big buys, foreclosure avoidance
Scott Rechler’s RXR gets mega-refi for Yonkers project that proved critics wrong
Scott Rechler’s RXR gets mega-refi for Yonkers project that proved critics wrong
Scott Rechler’s RXR gets mega-refi for Yonkers project that proved critics wrong
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
The Shoppes at Buckland Hills in Connecticut (Google Maps, iStock)
CMBS delinquencies plunge, but still above pre-pandemic levels
CMBS delinquencies plunge, but still above pre-pandemic levels
Namdar Group nabs $96M from Scale to build 800 Jersey City apartments
Namdar Group nabs $96M from Scale to build 800 Jersey City apartments
Namdar Group nabs $96M from Scale to build 800 Jersey City apartments
CW Realty's Cheskie Weisz and 187 Kent Avenue (CW Realty, The Kent House)
CW Realty escapes foreclosure on luxury Brooklyn project
CW Realty escapes foreclosure on luxury Brooklyn project
Top loans: Related Companies exits Margaritaville, digs in at Truffles Tribeca
Top loans: Related exits Margaritaville, digs in at Truffles Tribeca
Top loans: Related exits Margaritaville, digs in at Truffles Tribeca
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...