The conforming loan limit will jump nearly 16% in 2006, to $417,000.The $57,350 increase from $359,650 is one of the largest on record, and will allow as many as a half-a-million more borrowers to lock onto rates that are 25-50 basis points lower than those offered in the jumbo sector. The higher limit isn't likely to create many new buyers because those who can afford houses in the $360,000-$417,000 price range probably would have proceeded whether their loans were any less expensive or not, according to economists at the Mortgage Bankers Association. But their savings could be substantial, according to Freddie Mac's estimates -- up to $24,700 over the life of a 30-year fixed mortgage at current rates. The increase is based on the national average purchase price of one-family dwellings from one October to the next as calculated by the Federal Housing Finance Board. In October 2004, the average was $264,540. But 12 months later, it was up 15.96%, to $306,759. The limit on two-to-four-family mortgages will also jump in 2006 by a corresponding 15.96%: to $533,850 for a two-unit structure, $645,300 for a three-unit building, and $801,950 for a four-plex. For second mortgages, the ceiling will be $208,500. And in Guam, Alaska, Hawaii, and the Virgin Islands, all the ceilings will be 50% higher.

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