The Federal Housing Finance Agency [1] (FHFA) recently announced that it is increasing the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2020. Single-family properties in the U.S. will have their conforming loan limit raised from $484,350 to $510,400 in 2020.
The changes are based on changes in home prices nationally, as the FHFA reported that house prices rose 4.9% from Q3 2018 to Q3 2019. FHFA's seasonally adjusted monthly index for September was up 0.6% from August. According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 5.38% on average, between the third quarters of 2018 and 2019. Therefore, FHFA notes, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.
House prices rose [2] in all 50 states and the District of Columbia between the third quarters of 2018 and 2019. The top five states in annual appreciation were: Idaho (11.6%); Maine (7.9%); Arizona (7.9%); 4) Utah (7.8%); Indiana (7.4%). The states showing the smallest annual appreciation were: Illinois (1.9%); Connecticut (2.2%); Maryland (2.4%); South Dakota (2.7%); and Iowa (3.2%).
“House prices have risen every quarter for the last eight years,” said Dr. William Doerner, FHFA Supervisory Economist. “Relative to a year ago, market indices are still trending upward for the nation as a whole as well as in every census division, state, and the top 100 metro areas. Price gains, though, are continuing to slow their upward pace in a few cities with large housing markets.”
The FHFA also reports that in 2020, for areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600—or 150% of $510,400.