Category — National

Fannie Mae and Freddie Mac today announced a major initiative to provide up to $200 billion of immediate liquidity to the mortgage-backed securities market.

This move, combined with recent increases to conforming loan limits for Seacoast mortgages may help the Seacoast real estate market shake off the doldrums that it has recently experienced.

I wonder if this article may be the beginning of a new trend where the national media starts to try to predict the bottom of the real estate market.

Anyone have an opinion? Leave a comment below!

Congress and the Bush administration announced an economic stimulus plan yesterday that should will have some effect on the local Seacoast real estate market. A component of the package is the recommendation to raise the current loan limits for government backed Fannie Mae and Freddie Mac.

Under the proposal loan limits would be raised 50% from $417,000 to $625,000 for twelve months. The raised limits should have the effect of giving a boost to higher priced markets.

How would this affect the Seacoast real estate market?

24.1 percent of the 676 homes that are currently on the market have listing prices between the current loan limit of $417,000 and the proposed loan limit of $625,000. Buyers should be able to obtain better rates for those homes should the measure pass.

For instance, according to Bankrate.com this morning the national overnight average for a 30 year fixed mortgage is 5.42 percent, the rate for a jumbo mortgage that exceeds the current cap is over a point higher at 6.51 percent for a fixed jumbo mortage.

The Senate and White House sill must sign off on the plan.

January 24, 2008 - The National Association of Realtors reported today that nationwide existing home sales declined in December 2007 - no surprises there! In 2006 there were 6,478,000 existing home sales. For 2007 they are reporting 5,652,000 transactions, down 12.8% from 2006.December saw home inventory levels drop 7.4% to 3.91 million homes. This reduced the housing supply to 9.6 months from 10.1 months in November. Lawrence Yun, NAR chief economist, commented “The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets.”

The President of the National Association of REALTORS, Richard Gaylord, took the position that raising conforming mortgage loan limits would benefit the market.

“The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas,” he said. “It is grossly unfair that some Americans do not have access to low-interest rate loans. This would help people as they move away from risky subprime mortgages and high-interest rate jumbo loans.”

NAR projects that a higher loan limit would increase annual home sales, reduce the supply of homes on the market and strengthen home prices.

The current 2008 single-family mortgage loan limit published by FannieMae is $417,000, the same limit that has been effect since 2006.