A new CNBC report revealed that the conforming loan limit—or the maximum amount for the loans that the two companies will purchase and guarantee—will not be lowered, according to Bill Pulte, the recently confirmed Director of the Federal Housing Finance Agency (FHFA), who is in charge of the mortgage giants Fannie Mae and Freddie Mac. Every year, that cap is determined using the current cost of homes. As of right now, it sits at an estimated $806,500, up $39,950 (or 5.2%) from 2024.
“There are no plans to do anything as it relates to the conforming loan limit,” Pulte confirmed.
Many people anticipated that the Trump administration would try to cut the size of Fannie Mae and Freddie Mac as part of its intentions to diminish the federal government. The great bulk of the $12 trillion mortgage market in the U.S. is guaranteed by Fannie & Freddie.
“Those close to it see a reduction in loan limits appeasing the populists irritated that the government is insuring million dollar mortgages, when in reality there’s ample supply of capital from banks and non-banks to support that activity,” said Eric Hagen, Managing Director and Mortgage Finance Analyst at BTIG. “The question is how much mortgage rates for jumbo borrowers might need to increase to support it, all of which could be highly sensitive to timing and interest rates.”
Since the two companies entered conservatorship in 2008, the FHFA has been in charge of them. Following Pulte’s recent appointment, speculation has been rife over his plans for the two, particularly if he will take steps to reduce their conforming loan ceilings. Pulte shared a video of vacant desks, offices, and even the cafeteria on social media after seeing the Fannie Mae and Freddie Mac facilities last week.
According to the study, the FHA should also lower the loan limitations that qualify for FHA single-family mortgage insurance to (at most) the first quartile of property prices.
However, congress may want to limit the FHA’s single-family insurance portfolio to first-time homeowners, according to a recent analysis from the CATO Institute.
According to their research, the FHA may also want to lower the loan limitations that qualify for FHA single-family mortgage insurance to (at most) the first quartile of property prices.
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