President George W. Bush today signed into law an economic stimulus package that among others includes raising the limits on conforming mortgages financed by Fannie Mae and Freddie Mac to $729,750 from the current limit of $417,000 through December 31 of 2008. It would also indefinitely raise the limit on Federal Housing Administration-backed mortgages to that same level. Such a move is expected to lower the interest rates on those high-cost loans.
This will be a major stimulus for the housing industry and for people who want to own a home. An economic impact study conducted by NAR earlier this month estimated that increasing the conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.
The National Association of Realtors® has called on both the U.S. Department of Housing and Urban Development and the Office of Federal Housing Enterprise Oversight to promptly implement the higher conforming loan limits for Fannie Mae and Freddie Mac and the increased Federal Housing Administration loan limits that Congress mandated and that President George W. Bush today signed into law.