Mortgage lending limits will increase yet again for 2020
News from the Federal Housing Financing Authority provides the latest figures for the threshold for non-jumbo mortgages (or a ‘conforming loans’) and the numbers show a significant increase yet again. For 2020, the limit will raise to $510,400 for most areas in the country and $765,600 for high cost of living areas. This is an increase of 5.38%, in line with the average increase of home sales prices over the past year according to their analysis. This could make things slightly favorable for buyers, especially first-time buyers, since most predictions for the first part of the coming year have price growth staying under 5% (according to Redfin, Zillow and NAR; CoreLogic places their estimate at 5.6%). So even though the loan limit has increased by just over 5%, price growth might come in just under that and create a comfortable margin for those trying to buy their first house or trade up the one they already have.
Compared to the increase that took place in 2019, when the limit was raised by 6.9% to $484,350 and $726,525, respectively, this suggests a slight softening of the housing market but nothing too dire. Other signs things have softened include a recent report from CoreLogic Case-Shiller showing that even though prices increased 3.5% overall, 22 large metropolitan areas saw prices decline. Redfin also reported that bidding wars amongst their agents had reached a ten-year low with a national level of 10% (but don’t panic too much, San Francisco still wielded its mighty housing market force with 30% of offers undergoing a bidding war). With more borrowing leeway under the new loan limits and mortgage interest rates expected to stay under 4%, 2020 is going to tip more favorably towards buyers compared to last year.
For a look at a map of the loan limits by county you can go here.