Thursday the Senate voted 60 to 38 to raise the loan limits guaranteed by government-backed mortgage companies Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).
Back in September, we warned that loan limit changes would result in a decrease in home prices here in Massachusetts and New Hampshire. It would reduce the amount of people able to buy homes priced above the new limit, homes would be harder to sell, and prices would drop. We applaud the move to extend the loan limits.
At the end of September, government backed loan limits dropped from $729,750 to $625,500. This had a big impact here in Massachusetts, where median home prices tend to be higher than other parts of the country. This means that people buying a home in Massachusetts will now have to pay a higher rate or won’t be able to buy at all.
This bill, introduced by Senator Johnny Isakson (R-Ga.) and Senator Robert Menendez (D-N.J.) would allow the limits to go back to $729,750 through December 2013. (Limits in other parts of the country would vary).