Freddie Mac, Fannie Mae backing bigger home loans in 2025
Federal Reserve cuts interest rates by a quarter point
Nadia Stanley, Financial Services Professional & Agent with NY Life Securities, joins LiveNOW from FOX to talk about the Federal Reserve cutting interest rates by a quarter point. Fed officials made its second consecutive interest rate cut on Thursday.
The Federal Housing Finance Agency (FHFA) announced on Tuesday it is raising the loan amount limits for mortgages purchased by Freddie Mac and Fannie Mae by 5.2% in 2025, as home prices continue to soar in the U.S.
The new conforming loan limit value for a one-unit home will be $806,500 next year, an increase of nearly $40,000 from the 2024 baseline cap.
However, in high-cost areas of the country where 115% of the local median home value exceeds the baseline loan limit, the loan ceiling is 150% higher. So, the loan cap for a single-unit home in those areas will be $1,209,750, which is 150% of $806,500, FHFA said.
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The FHFA adjusts loan limits for government-sponsored enterprises Freddie and Fannie on an annual basis to reflect changes in the average home price, which climbed 5.21% from the third quarter of 2023 to the same quarter this year.
Home prices have surged in the U.S. in recent years, along with mortgage rates, causing a sustained affordability crisis in housing.
Freddie Mac's latest Primary Mortgage Market Survey, released last Thursday, showed that the average rate on the benchmark 30-year fixed mortgage rose to 6.84% from last week's reading of 6.78%. The average rate on a 30-year loan was 7.29% a year ago.
Also on Tuesday, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported home prices hit their 16th consecutive all-time high in September and now sit 51% higher than at the start of the pandemic.
Home prices in the U.S. have hit record highs for 16 consecutive months, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. ( Liu Guanguan/China News Service/VCG via Getty Images / Getty Images)
"When higher prices are coupled with persistently elevated mortgage rates and adjusted for inflation, a typical mortgage payment, only including principal and interest, is now 82% higher than pre-pandemic," CoreLogic chief economist Selma Hepp reported, noting that figure does not include the rising costs of property taxes and insurance.
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"As a result, it’s not hard to see why the housing market is in the doldrums," Hepp added.