Two more lenders have joined the parade of early conforming loan limit boosters, Crosscountry Mortgage and Rate. They join United Wholesale Mortgage and
Of the major lenders who have done so in the past, only Rocket has not announced if they plan to follow suit.
The Federal Housing Finance Agency, rebranded by its director as U.S. Federal Housing, normally announces the following year's conforming loan limits in November.
The annual increase in the top loan amount at which Fannie Mae and Freddie Mac will purchase a mortgage during a given year is in a formula set by the Housing and Economic Recovery Act. The FHFA's own House Price Index for the third quarter sets the base for the percentage increase in those limits.
But neither Fannie Mae or Freddie Mac will purchase loans at these higher amounts until the new year. Until then, lenders have to hold them on their balance sheet. The risk, albeit a calculated one, is that the new conforming limits are below the amount these independent mortgage bankers are setting.
The second quarter FHFA House Price Index, released in August, increased 2.9% over the same period last year. The four lenders who are boosting their own limits are doing so at approximately 1.5% over the current level of $806,500.
In a Sept. 22 research report on United Wholesale Mortgage, BTIG analyst Eric Hagen noted
This boost "effectively adopts FHFA's prescriptive formula for setting loan limits based on national average home values," Hagen continued.
Certain high cost areas have higher loan limits. Alaska and Hawaii, in particular, the single-unit conforming limit is almost $1.210 million; Rate will make GSE-eligible loans in those states up to nearly $1.23 million.
"This early action not only supports homebuyers in a dynamic market — it also empowers our loan officers with the tools and pricing advantages they need to win and serve clients more effectively," said Jeremy Collett, chief capital markets officer at Rate in a press release.
Crosscountry Mortgage has branded its increase as the Early Bird Program.
"Today's housing market can be tough to navigate, and CCM is focused on creating solutions that give homebuyers an edge," said Jenn Stracensky, chief operating officer in a press release. "By raising limits early, our Early Bird Program empowers borrowers to act now and move closer to their dream of homeownership."
