A new change in federal housing policy is affecting the Washington, D.C.-area market.
A new change in federal housing policy is affecting the Washington, D.C.-area market, according to the Washington Post.
On Oct. 1, Fannie Mae and Freddie Mac lowered the maximum size of so-called jumbo mortgages that they would back to $625,500. Before Oct. 1, Fannie and Freddie could buy Washington-area mortgages as large as $729,750 and repackage them to sell to bond investors, or get guaranteed by the Federal Housing Administration. The change was the result of a law Congress passed in 2008 to stimulate the housing market in the depths of the crisis.
As a result, the upper end of the Washington real estate market is getting squeezed as buyers have fewer options to finance the purchase of a house.
Although a mortgage larger than $600,000 may seem huge, Washington remains one of the most expensive markets in the country, and such loans are common there. Washington ranks fourth among U.S. metropolitan areas in the number of houses affected by the new limits, according to researchers at New York University’s Furman Center for Real Estate and Urban Policy. The center found that 2.7 percent of the market, or 1,755 area houses, is no longer eligible for government backing, based on an analysis of 2009 home purchases.
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