FHFA Announces Higher Conforming Limit as More Americans Consider Relocation
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) raised the maximum conforming loan limit (CLL) to $548,250 for 2021.
That’s a sizable increase from the $510,400 limit in 2020 for loans that can be acquired by Fannie Mae and Freddie Mac.
The Housing and Economic Recovery Act (HERA) requires adjustment to the baseline CLL each year based on changes in the average U.S. home price.
According to the FHFA’s House Price Index, home prices have increased by an average of 7.42 percent between the third quarter of 2019 and the same period in 2020. The baseline maximum CLL in 2021 will increase by the same percentage.
In high-cost areas — defined as those in which 115 percent of the local median home value exceeds the baseline CLL — the 2021 loan limit is $822,375. This is equal to 150 percent of the baseline CLL of $548,250. Some high-cost areas will have a lower maximum based on median area home value.
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $822,375 for one-unit properties.
The maximum CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.
Questions about the 2021 CLLs can be addressed to LoanLimitQuestions@fhfa.gov. Additional information is available at https://www.fhfa.gov/CLLs.
In other mortgage industry news released during the shortened holiday week:
A Lending Tree survey indicates that demand for purchase mortgages could be strong in 2021. About 46 percent of the 2,000 survey participants are thinking about relocating within the next year. This includes those considering a new place in their current area (27 percent), in another city in their state (12 percent) or a new state entirely (8 percent). The survey found that unemployment, the desire to leave densely populated areas, and people wanting more living space were factors in this decision.
Freddie Mac reported that its total mortgage portfolio increased at an annualized rate of 25.7 percent in October.
Black Knight reported an increase of 27,000 active forbearances for the week ending November 23. That was down slightly from the 30,000 new forbearances the previous week. As of November 23, there were 2.78 million homeowners in active forbearance plans, representing about 5.3 percent of all active mortgages and $564 billion in unpaid principal. About 3.6 percent of all GSE-backed loans and 9.2 percent of all FHA/VA loans are currently in forbearance plans.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
