Proposed Increase To Mortgage Loan Limits May Benefit Seacoast Real Estate Market

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.