WASHINGTON – U.S. mortgage finance regulators on Tuesday raised the limit for loans that can be bought by government-sponsored mortgage enterprises Fannie Mae (FNM) and Freddie Mac (FRE) to $417,000 for 2006, in most areas.
Lenders charge lower interest rates for mortgages they are confident they can sell to Fannie Mae and Freddie Mac.
Stephen Blumenthal, acting director of the Office of Federal Housing Enterprise Oversight (OFHEO), announced the rise in what is called the conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac. The 2005 limit is $359,650.
Costlier mortgages are referred to as jumbo loans.
The rise in the conforming loan limit is pegged to a year-end monthly survey of single-family house prices by the Federal Housing Finance Board.
Effective January 1, the conforming loan limit for larger properties is $533,850 for two-unit mortgages; $645,300 for three-unit mortgages; and $801,950 for four-unit mortgages.
The limit in high-cost areas, which include Alaska, Guam, Hawaii, and the U.S. Virgin Islands, is 50 percent higher.