The Federal Housing Finance Agency (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 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.