Lazerson, however, thinks interest rates will stay the same, or could even go down.
“The economy in general is tepid, at best,” he said. “Wages are stagnant, and that’s a key driver. Things have really slowed down. If there’s no demand for money, what’s the point of raising the rates?”
The Limits: The Federal Housing Finance Agency has signaled it likely will lower conforming loan limits in the summer of 2014, according to various reports. This, too, could shut off many homebuyers from getting conventional loans.
The housing industry is urging the agency not to pull the trigger.
Conforming loans are those purchased by Fannie Mae and Freddie Mac. The two federally chartered mortgage finance companies buy the mortgages from lenders and keep them or bundle them into securities that they offer to investors with a guarantee.
Currently, Fannie and Freddie cannot back loans of more than $417,000 in most markets, though the limit ranges as high as $625,500 in some pricier areas.
If the limits are lowered, “Fewer will qualify for the home they would be able to qualify for today,” said John Stehle, vice president of mortgage lending for Guaranteed Rate’s Costa Mesa, Calif., branch.
“Borrowers that no longer qualify for conforming will have to move to high-balance (loans), and borrowers that no longer qualify for high-balance will now have to go jumbo,” he said. “The rates will be higher, and the qualifying tougher, with each higher-limit tier.”
Many politicians and real estate industry leaders have objected to lowering the limits, a move many worry could impede the housing market, though lowering the limits would fit with the Obama administration’s goal to wind down Fannie Mae and Freddie Mac. During the economic meltdown, the two enterprises ran into big trouble and were placed under government conservatorship. They have since become profitable.
©2013 The Orange County Register (Santa Ana, Calif.)
Distributed by MCT Information Services
