By Alicia Lanier, REALTOR
You could hear the cheers and high-fives … and sighs of relief … all across California Friday as Congressional leaders working on an “economic stimulus package” to stave off recession tentatively agreed to raise the $419,000 cap on conforming loans at least through the end of the year.
The immediate effect would be lower home loan rates for buyers in pricey markets like ours here in the Silicon Valley and hopefully jumpstart housing sales in some of the sluggish housing areas.
The plan – which also includes the much-mentioned tax rebates for American wage earners – was agreed upon by Democratic and Republican members of the U.S. House of Representatives and would allow government-sponsored Fannie Mae and Freddie Mac to buy mortgages up to 75 percent more expensive than the current $417,000 limit. The Senate and White House still must sign off on the proposed stimulus plan – and the sooner the better.
Both the California Association of Realtors (CAR) and the National Association of Realtors (NAR) have been pushing for a permanent expansion of the Fannie and Freddie limits. NAR calculates that borrowers could save $3,000 to $5,000 per year in reduced interest costs as a result and projects up to 210,000 foreclosures could be prevented since refinancing into lower-rate loans would be easier.
Meanwhile, the Association of Bay Area Governments, in its annual economic forecast, predicted today that the Bay Area probably won’t slide into a recession this year, but it will come close with slowing job growth and a continued housing slump. But, the group says, the Bay Area won’t lose jobs, the way it did during the dot-com crash.
Related Post: November 29, 2007, Affordability Issues for Silicon Valley Home Buyers Deepen with Feds’ Jumbo Loan Decision for ‘08
Alicia Lanier is a REALTOR and member of the Coldwell Banker Diamond Society – Top 8% of Agents Internationally www.AliciaLanier.com 408-491-1634
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