You Can Buy A $1.2 Million Home With 5% Down – Woohoo!

The FHFA (the agency that regulates Fannie Mae and Freddie Mac) just announced its new conforming loan limits, and the new limit for “high-cost” areas is now $1,149,825! This means that homebuyers can buy a $1.2 million home with only 5% down. This is amazing, as this used to be solidly in “jumbo territory” – with down payment requirements in the 20% range for competitive financing.

The new conforming loan limit for non-high-cost areas is $766,550 – up a full 5.5% or over $40,000 from 2023’s limit.

Please see the tables below that set out all of the new loan limits for 1 – 4 Unit Properties.

Fannie Mae And Freddie Mac = Subsidized Financing To Make Housing “More Affordable” (Bahahahahaha)

Higher conforming loan limits are wonderful for those of us in the mortgage and real estate industries and for anyone in the housing market now.

BUT – they are awful for our kids…

In 2016, the conforming loan limits were $417,000 and $625,500 for high-cost areas – substantially lower than where they are today.

The median home price was in the $200,000+ range in 2016 too, compared to about $430,000 right now.

Fannie Mae and Freddie Mac are effectively enormous government subsidies, as they provide financing that no other lender would – without the implicit Fannie/Freddie guarantee.

The “subsidy” is ostensibly to make housing “more affordable,” but it only does so for the current crop of homebuyers – as it invariably drives up home prices like ALL subsidies do.

So, yay! The conforming limits are way up again. But, they will only make housing that much more expensive for anyone not in the housing market now… like our kids.

Ironically, we need less government (not more subsidies) to make housing more affordable – in that we need fewer regulations, less restrictive zoning, fewer building code requirements, and fewer and lower permitting fees to increase the supply of housing.

New 2024 Conforming Loan Limits


New 2024 High-Cost Conforming Loan Limits


Does The Fed Really Control Interest Rates?

This is a topic I address frequently, and am bringing it up again because rates continue to fall – DESPITE our excess supply of Treasury Bonds; despite our strong GDP growth; and despite the Fed’s insistence that rates will remain “higher for longer.”

The 10 Year Treasury Yield has been falling all week and is now under 4.3% – a full 0.7% LOWER than where it was in October – despite all the predictions of 6% to 13% yields “coming soon.” Bond investors are highly sophisticated and they focus on economic growth and inflation projections, and falling yields seem to indicate that they think both growth and inflation will be slow to non-existent in the near future.

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