The Real Deal Miami

Federal government to end mortgage backing for top-end homebuyers

May 11, 2011 01:20PM

Buyers and sellers in upscale housing markets in New York, New Jersey, Conneticut, California and Massachussetts will lose government mortgage backing by the end of the summer, according to the New York Times, with Democrats and Republicans agreeing that taxpayer money should not go towards top-end mortgages.

The federal government backed nine out of ten mortgages nationally last year. Federal agencies have backed new mortgages in affluent regions as high as $729,750 for the last three years as without the government security, lenders may have refused backing.

This decision may result in fewer potential buyers for luxury homes, analysts said, but the government is eager to see if the private mortgage market can go it alone.

The Real Deal reported last week that mortgage applications had declined as a result of a hike in insurance premiums from the Federal Housing administration. [NYT]