Conforming Loan Limits Increase For The Second Straight Year
For the second straight year, the Federal Housing Finance Agency (FHFA) has increased the maximum conforming loan limits for mortgages to be purchased by Fannie Mae and Freddie Mac.
This is only the second time since the housing crisis that conforming loan limits have increased. Last year was the first year where conforming loan limits were increased.
So, what does this mean for the Knoxville real estate market in 2018? Read on to find out more.
Since the Housing and Economic Recovery Act of 2008, the Federal Housing Finance Agency has determined conforming loan limits. A conforming loan is a mortgage that meets the guidelines for Fannie Mae and Freddie Mac to purchase. Fannie Mae and Freddie Mac end up buying a majority of loans. This is why a conforming loan increase is such a big deal since it affects a majority of loans. Conforming loan limits fluctuate with the real estate market.
Conforming loan limits had remained at $417,000 until last year, when the FHFA increased the loan limits to $424,100. Next year, the loan limits will increase to $453,100. For those areas that are considered high-cost areas, conforming loan limits are higher to account for the high cost of living. In high-cost areas, the conforming loan limits will increase to $679,650 to account for the difference in cost of living.
The conforming loan limits couldn’t increase until home prices increased to the pre-decline levels. But, over the past two years, home prices have increased steadily, making it necessary for a conforming loan limit to increase. The FHFA third quarter 2017 House Price Index report estimates that over the last four quarters, home prices increased 6.8% between the third quarters of 2016 and 2017.
Knoxville has seen steady price increases over the past two years. Homes have been selling quickly when they’re priced competitively. Buyers are still finding that we’re in a strong seller’s market. We should expect the same to happen in 2018.
Are you thinking about buying a Knoxville home this year? Please let us know if there is any way that Knoxville Home Team can assist you. Rick can be reached at 865-696-9002 or via email at [email protected]. Kati can be reached at [email protected] or at 865-696-1888.