LIME REALTY GROUP is back with another prediction for 2017!!! Last time we talked about mortgage rates increasing but not by a huge amount. This week we want to predict more people will have access to home loans!
At the start of 2017, government sponsored mortgage giants Fannie and Freddie were back with bigger mortgages for the first time since 2006. The loan limits insured by these companies will increase to $424,100 from $417,000 in most regions of the US. In expensive housing markets, this opens up opportunities for those who felt priced out. In some cases, considering the inflated values, allowable loan sizes will increase to $636,150 from $625,500.
The Trump Administration recently suggested that they plan to privatize Fannie and Freddie. We expect that proposed changes to the companies would not affect the mortgage market until 2018, due to the lengthy political process of repealing their charter.
Additionally, as the Federal Housing Authority; or FHA, has achieved sounder footing, there is an increased likelihood the the White House may further lower FHA fees. These fees make it more costly for first-time home buyers to purchase homes. In addition to a mortgage rate, FHA borrowers pay a one-time upfront fee of 1.75% of the mortgage balance and annual premiums of .85%.
The Obama White House lowered annual premiums from 1.35% in 2015, but these fees are still higher than the .60% rate in 2011.
Our final reason for our new prediction is that large financial institutions like Bank Of America, JPMorgan, Wells Fargo and Quicken all introduced mortgages requiring as little as 1% to 3% down. We expect this will increase the availability of low downpayment mortgages to draw more buyers into the housing market.
We’ll make another prediction soon so keep checking back!