The conforming loan limit will remain at $417,000 next year.Although the index used to determine the maximum loan amount Fannie Mae and Freddie Mac can purchase or guarantee showed a slight decline of $501, the Office of Federal Housing Enterprise Oversight said recently that it would not lower the ceiling if the index declined. The mere 0.16% slip in the average price of both new and existing houses, from $306,759 in October 2005 to $306,258 last month (as measured by the Federal Housing Finance Board), would have resulted in a $667 decline in the limit -- to $416,333. But OFHEO Director James Lockhart said recently that the ceiling would not be lowered in order to "avoid disrupting the end-of-year" mortgage pipeline. However, the dropoff will be used in calculating the loan limit for 2008. OFHEO took over responsibility for setting the ceiling in February 2004. Prior to this year's decline in the FHFB index, the average increase in the October-to-October price of houses over the previous five years was 8.8%. Last year's limit was 15.9% above the $359,650 ceiling in 2005.

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