Does The Fed Really Control Interest Rates?
The 10 Year Treasury Yield has been falling all week and is now under 4.3% - a full 0.7% LOWER than where it was in October – despite all the predictions of 6% to 13% yields “coming soon.” Bond investors are highly sophisticated and they focus on economic growth and inflation projections, and falling yields seem to indicate that they think both growth and inflation will be slow to non-existent in the near future.
You Can Buy A More Expensive Home With 5% Down
The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has just unveiled its latest conforming loan limits. The new conforming loan limit stands at $766,550. This represents a significant increase of 5.5% or over $40,000 compared to the 2023 limit. To provide a comprehensive overview of the new loan limits for 1-4 unit properties, please refer to the table below.
Fannie Mae and Freddie Mac = Subsidized Financing To Make Housing "More Affordable"
Elevated conforming loan limits represent a positive development for professionals in the mortgage and real estate sectors, as well as for those currently involved in the housing market. However, these increases come with a downside, particularly for the younger generation. To put things into perspective, back in 2016, the conforming loan limits were significantly lower, at $417,000 and $625,500 for high-cost areas. During that time, the median home price also hovered in the $200,000+ range, a far cry from today's approximate $430,000.
Fannie Mae and Freddie Mac play a crucial role in providing financing that often wouldn't be available from other lenders, thanks to their implicit government backing. While this is ostensibly aimed at making housing more affordable, it primarily benefits current homebuyers and has the unintended consequence of driving up home prices, as most subsidies tend to do. So, while it's tempting to celebrate the increase in conforming limits, we must also acknowledge that they contribute to making housing even more expensive for those who are not currently in the market, including our children.
Ironically, the path to making housing more affordable involves reducing government intervention rather than introducing more subsidies. This entails streamlining regulations, loosening restrictive zoning, minimizing building code requirements, and reducing permitting fees to boost housing supply and affordability.
New 2024 Conforming Loan Limits
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