Categorized | Residential

New Mortgage Limits – New Hurdle for Housing Market?

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For the Already confused home buyers across the country there is one factor that needs to be considered before taking that all important investment decision. This is the factor that is related to the New Mortgage Limits that are going to come in to effect from October 1 2011. There has been a new proposal in the form of a new Mortgage regulation with respect to the limit on the government guaranteed loan, also called as the conforming loan. Many prospective housing market investors have already started asking the question, New Mortgage Limits – New Hurdle for Housing Market? And no one has the right answer for this question.

U.S.Congress had actually increased the conforming loan limits to $ 729,750 in certain regions where the housing prices are relatively high compared to the other regions. This change actually helped a number of borrowers to go for the Loan in order to invest in the property in the higher price locations. Now with the proposed Mortgage Regulation, the new limit will again be brought back to the previous levels of $625,000, thus making it difficult for the borrowers to buy properties in the high price range regions. Now both the borrowers and the lenders will totally concentrate in the low to medium housing price range regions. Now coming back to the question, New Mortgage Limits – New Hurdle for Housing Market? And the answer is slowly emerging.

Housing market experts feel that with the reduction in the loan limits for the government guaranteed loans, the lending rates will start to increase. Because of the reduction of mortgage limits for the government guaranteed mortgages, investors who have been planning to go for a mortgage loan in higher price regions such as New York, Washington D.C and Los Angeles will not be able to go for it. Paul Bishop, who heads the research wing of the National Association of realtors strongly, feels that the increase in mortgage rates combined with the lowering of limits on conforming loans will have an impact in higher price regions. The investors will be forced to go for Jumbo loans at higher interest rates, which not many will be inclined to do. Now coming back to the question, New Mortgage Limits – New Hurdle for Housing Market? And the answer is a definite yes.

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About Josh Johnson

Josh is the main writer for the Residential category. He also helps out on other categories when needed, mainly the International section.

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