Frozen at $417,000 since 2007, a new national conforming loan limit is expected to be announced later this fall.
The Economists’ Outlook blog reports that the limit will likely be raised to between $418,000 and $427,000. The high-cost limit, currently at $625,000, will be bumped up to between $627,000 and $640,500.
The main beneficiary of this change will be consumers. Loans greater than the conforming and high costs limits are called “jumbo” and are typically held by banks or securitized into private label mortgage backed securities (PLS). However, the PLS market has not recovered from the crisis and most loans held in portfolio are of extremely high quality with large down payments, high credit scores, low debt-to-income ratios, and large reserves.
