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August 22, 2011

New Conforming Loan Limits October 1, 2011

August 22, 2011

New Conforming Loan Limits October 1, 2011

We appear to be marching toward a reduction in the temporary loan limits, although there are numerous attempts to extend it. HUD weighed in last week with its FHA single-family loan limits which are effective on or after October 1, 2011 through December 31, 2011.

Here are the FHA floor and ceiling limits. Please note that Conventional (non-FHA) ceiling limits will be the same as these FHA ceilings as of October 1:

FHA floors for October 1, 2011 through December 31, 2011 are:
-$271,050 (1 unit)
-$347,000 (2 units)
-$419,425 (3 units)
-$521,250 (4 units)

The FHA ceilings are:
-$625,500 (1 unit)
-$800,775 (2 units)
-$967,950 (3 units)
-$1,202,925 (4 units)

For all other areas, i.e., those where 115% of the median home price for the area is in between the floor and the ceiling, the limit shall be at 115% of the median home price.

For areas under Section 214 of the National Housing Act (Alaska, Guam, Hawaii and the Virgin Islands), higher ceilings of $938,250, $1,201,150, $1,451,925 and $1,804,375 for 1-, 2-, 3-, and 4-unit dwellings, respectively, apply.

The same FHA ceilings noted above would go for non-FHA conventional mortgages unless Congress pulls a rabbit out of its hat.

Mortgage Industry Volume
Even with the chatter about lower loan limits affecting overall loan production, industry projections have risen as rates have dropped.

The Mortgage Bankers Association raised its forecast for loan production this year to $1.1 trillion in residential mortgage origination, up $100 billion from its last forecast. Low mortgage rates have brought in higher than expected refinance volume, while purchase volume has been less than anticipated. But put those pennies aside: despite lower rates, weaker projected economic growth in 2012 led to a reduction in MBA’s origination forecast for that year to $931 billion, which would be the lowest volume originated since 1997.