OFHEO just announced the temporary conforming loan limits:
TEMPORARY CONFORMING LOAN LIMITS RELEASED FOR HIGH COST AREAS
Washington, DC – The Office of Federal Housing Enterprise Oversight (OFHEO) today released the maximum conforming loan limits that will be in effect through year-end as a result of The Economic Stimulus Act of 2008. That legislation permits Fannie Mae and Freddie Mac to raise their conforming loan limits in certain high-cost areas. The new jumbo limits are a function of median home prices as estimated by the U.S. Department of Housing and Urban Development (HUD).
The maximum for temporary jumbo conforming loan limits, which apply to loans originated in the period between July 1, 2007 and December 31, 2008, are as high as $729,750 for one-unit homes in the continental United States. Two, three and four-unit homes have higher limits as well. Alaska, Hawaii, Guam and the Virgin Islands also have higher maximum limits.
King, Snohomish and Pierce Counties
SFD: $567,500
2 Unit: $536,050 $726,500
3 Unit: $648,000 $878,150
4 Unit: $805,300 $1,091,350
Not all counties appear to have received an increase to loan limits as they did with FHA today. Other counties with temporary increased conforming loan amounts included Kitsap, Clark, Skamania, Jefferson and San Juan. This information is all very new and I will follow up with more information as I receive it.
Thanks Rhonda!
Are these temporary limits for new purchases or do they also apply to refi’s?
T-Bone, the temporary limits are for both purchases and refi’s. Now the limits have been announced, the next step is waiting for Fannie/Freddie and lenders to activate.
Here’s a pretty good news article about this from San Fransisco.
I could not read the WSJ article.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/06/BUJBVEACQ.DTL
Rhonda – you probably saw this today from Bloomberg:
The difference in yields, or spread, on the Bloomberg index for Fannie Mae’s current-coupon, 30-year fixed-rate mortgage bonds and 10-year government notes widened about 11 basis points, to 227 basis points, the highest since 1986 and 93 basis points higher than Jan. 15. The spread helps determine the interest rate homeowners pay on new prime mortgages of $417,000 or less.
Your post last Friday showed a 100BP spread between conforming and Jumbo. It will be interesting to see how these price given turmoil in the markets.
Deejayoh:
Thanks for that tidbit.
Allow me to be lazy for a moment, and ask:
Why has this spread widened recently? Is it because of increased perceived risk by the lenders, and the need to bank a little more profit, in case of future losses?
Or is it the perceived risk of inflation?
Or something else?
I come to RCG to enlighten, as well as be enlightened….!
“Why has this spread widened recently?”
Because Fannie Mae is already in financial trouble, and is now being pushed to purchase even more mortgages to bail out the housing market. You think we have credit problems now – wait until Fannie and Freddie start having real difficulties.
In addition to ABR’s comment, you also have margin calls on major holders of MBS – which has resulted in massive deleveraging (Thornburg, UBS, etc) in panic mode. That’s driving up mortgage yields.
could be a blip, could be a trend. Time will tell.
This is a little off-topic, but does anyone know if 15 and 30 year fixed mortgage rates are tied to the 10 year treasury bill or not? I was under the impression that 15 and 30 year fixed rates have been going up even though the 10 T-bill rates have been dropping. Maybe I have just been mis-reading the rate directions for mortgageas and T-bills.
If the fixed mortgage rates aren’t tied to T-bills, then I wonder what they are tied to? The LIBOR is used for ARMS, so I don’t know what the fixed rates would follow.
Sniglet, Dan Green CMPS in Chicago just wrote a great post on what mortgage rates are based on: http://www.themortgagereports.com/2008/03/5-things-that-d.html
Dan has one of my favorite mortgage blogs.
Sniglet-
Couple of things:
1. Not sure what you mean by the 15 and 30 Yr fxd being tied to 10 Yr Treas Bonds? Banks use the spread between Freddie Mac 30yr and Treasury 10 yr bonds for valuations purposes because the WAVG life of a mortgage is roughly 10 years. The spread relationship isn’t fixed.
2. Also, T-Bills have maturities less than 1 year. Anything beyond that is technically a T-Bond.
Thanks Rhonda! You confirmed what I already suspected (i.e. that there is no direct link between mortgage rates and t-bills).
Rhonda and Sniglet-
I do have something to add to Mr Green’s second point about Fed Funds not affecting Mortgage rates.
Some ARMs are tied to 12 MTA (moving 1 year treasury average), which is highly correlated to Fed Funds, I believe over 90%.
Sniglet, check out how today’s market closed:
FNMA 30 Year 5.5% closed down at a negative 103 bps.
US 10 Year T Note closed at a postive 81bps.
Rhonda – Maybe I’m not reading the pdf on the ofheo website correctly, but it looks like for WA – King, Pierce & Snohomish are as follows (different from what is stated in your post):
SFD – $567500
2Unit – $726500
3Unit – $878150
4Unit – $1091350
Am I missing something?
rr,
Those match the numbers Rhonda reported earlier today as the amounts for FHA.
I believe”rr” is right.
It looks like Rhonda grabbed the numbers from the row 1 up, after the first one.
It’s been a pretty hectic day, has it not?
Rhonda:
Where did that July 1, 2007 date come from? Typo?
Does the press release mean that these will not be available until July 1 of 2008?
Roger, I’m so glad you asked that. NO it’s not a typo. Fannie and Freddie can buy loans up to the new conforming limit (jumbos) that have not yet been purchased by Wall St that are from July of last year. This will hopefully free up credit lines and will (hopefully) trickle down to benefit the consumer.
If the add to rate is 1.00 or more, the raise in conforming limits was for this purpose only. It may not be as beneficial as we had hoped as LOs.
rr – Conforming and FHA have the same limits for King County, Pierce and Snohomish Counties. I know my posts may seem redundant today…FHA was announced first and conforming next. I was reporting as the news came rolling… 🙂
Woops…look like I was reporting faster than my fingers could type! Corrections to come soon…what a day!
Well, I will attempt to answer my own question to some degree, based on some not so lazy research, and then subject the answer to the critisicm and refinement of the good readers of RCG.
The 30 yr fixed rate is not based on the 10 yr T-note (I already knew that, thanks to MMG), but there has historically been a high degree of correlation.
The 30 yr fixed rate is based on Mortage Backed Securities (MBS) which is essentially determined by what investors are willing to pay for them.
Since the 10 yr T-note and MBS were both generally perceived to very low risk investment, with a similar yield, they tracked closely.
Today, MBS are considered to be a considerably higher risk that the 10 yr T note, and investors want a higher return for that risk.
There is some concern that investors do not want MBS at all.
I have a fairly interesting article on the subject, but I do not know how to post a document in here, only links. I know, I am a troglodyte!
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You know, I was fully prepared to hate the new program because I don’t think FHA or the GSE’s should be in the jumbo business. However, after looking at the details I think the underwriting guidelines look pretty responsible. My only question is how many folks are going to meet these guidelines? These aren’t the old Countrywide portfolio jumbos for sure.
See the lending matrix at: https://www.efanniemae.com/sf/mortgageproducts/pdf/jumbomatrix.pdf
-Max CLTV: 90% on purchases (more if in a ‘declining market’)
– DTI: 45% maximum, with all ARMs qualified based on the fully amortizing payment at the higher of the note rate or fully-indexed rate
-Credit: Minimum 660 FICO (or higher depending on LTV), no mortgage lates for at least 12 months
Do you know of any wholesale lenders that are now lending on this new loan limit? Please let me know who!!
Help!
Ted, we’ve been lending at these limits for a few months now. All the banks/lenders offer it that I know of.