Anybody who wants a government-backed mortgage for a $1-million home after October 1 may have to come up with a $370,000 down-payment instead of $270,000..
The deadline will mean most to upper-middle-class buyers and sellers in costly real estate markets where $1 million buys a nice house, but not a mansion.
To be sure, that part of the market is picking up. Real estate agents operating in tonier neighborhoods are reporting brisker business this spring than in recent years.
The National Association of Realtors reported that the sale of homes over $1 million were up 5.1 percent in March over the same month last year.
BIG MORTGAGES
It was only in recent years that the loan limits went so high. Mortgages that are too big to be sold to Fannie and Freddie are termed jumbo loans and are backed privately. Until 2008, all home loans over $418,000 were considered jumbo loans. In that year, a stimulus-focused Congress twice raised the limit on loans the government would back in high cost areas, first to $625,500 permanently, and then to $729,750, temporarily.
Since then, Fannie and Freddie have backed an increasing share of that market. In 2010, so-called “jumbo conforming” loans, those over $417,000 and government-backed, made up 6.73 percent of loan origination's, according to CoreLogic.
That top temporary limit was extended twice, but is expected to expire at the end of September.
When that happens, lenders who want to make loans over $625,500 will have to hold onto the mortgage themselves or find private investors to buy them. And while an active and hungry secondary market for these jumbo loans has yet to materialize in the post-crash world, there’s some evidence that lenders are preparing to move into that space and pick up any slack that the government leaves.
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