Well, check this out — the Federal Housing Finance Agency (FHFA) recently made the biggest announcement so far! Specifically, they pledged that the conforming loan limit will stay at $806,500. Bill Pulte, the FHFA’s newly confirmed director, came to this conclusion. That’s a $39,950, or 5.2%, increase from FY2023 in FY2024 as proposed. The conforming loan limit is recalibrated each year based on rising home prices. This cap serves as the upper bound on mortgages that Fannie Mae and Freddie Mac will buy and guarantee. These two government-sponsored enterprises backstop almost three-quarters of the nation’s $12 trillion mortgage market.
Consumer protection under the FHFA Fannie Mae and Freddie Mac have been under the watch of the FHFA since they entered conservatorship in 2008. Recently appointed director Bill Pulte recently joined the organization as a director. In March, FHFA Director Williams announced that FHFA has no plans to increase the present conforming loan limit.
"There are no plans to do anything as it relates to the conforming loan limit," – Bill Pulte, FHFA director.
We know the Trump administration has signaled their desire to draw down the federal government’s role in many sectors, including housing finance, before. Most notably, some people anticipated the Administration to push to reduce Fannie Mae and Freddie Mac’s footprint. Given the position of the newly-confirmed director, those reductions are unlikely to be on the way.
In a move to familiarize himself with the enterprises, Bill Pulte recently toured the offices of Fannie Mae and Freddie Mac. In doing so, he garnered international attention with videos posted on social media showing vacant offices, cubicles, and cafeteria tables. As this visit shows, he’s focused on getting firsthand insight into the operations and challenges that these essential financial institutions have to serve all Americans.
We’ve witnessed one of the largest increases to the conforming loan limit in decades. This is a shift that’s in line with increasing home prices nationwide. This adjustment aims to ensure that Fannie Mae and Freddie Mac can continue to support homebuyers despite escalating real estate costs.
The CATO Institute, a libertarian Washington, D.C.-based think tank, has been all too eager to announce its opposition to federal housing policies. As part of the effort, it calls on Congress to narrowly define the Federal Housing Administration’s (FHA) single-family insurance portfolio to only include first-time homebuyers.
"Additionally, the FHA should decrease the value of loan limits eligible for FHA single-family mortgage insurance to (at most) the first quartile of home prices," – The CATO Institute.