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| Revised Fannie, Freddie Loan Limits Will Benefit California Homebuyers, But Don't Go Far Enough to Improve Homeownership Opportunities in Golden State |
LOS ANGELES, Nov. 25 /PRNewswire/ -- More than 4,100 families in
California will be able to benefit from Fannie Mae's and Freddie Mac's
announcements today that each will increase their single-family mortgage loan
limit from $322,700 to $333,700 in 2004, according to an analysis by the
California Association of REALTORS(R) (C.A.R.).
"While this is good news for many homebuyers, Fannie Mae's and Freddie
Mac's new loan limits do not go far enough to improve homeownership
opportunities in California," said C.A.R. President Ann Pettijohn.
"Conforming loan limits need to more accurately reflect the cost of housing in
California, where the median price of a home is more than double that of the
nation."
The current median home price in California is $381,200, an increase of
17 percent compared to a year ago and more than 14 percent higher than the
national conforming loan limit of $333,700. In addition, California has
14 counties with a median-home price above the national conforming loan limit.
Based on its 2004 sales projection, C.A.R. expects that 390,800 sales in
the state will fall into the price range implied by the higher loan limits, an
increase of 11,800 homes over the 2003 loan limits. The $11,000 increase in
the single-family mortgage loan limit translates into an additional
4,100 households able to take advantage of savings provided by having a Fannie
Mae or Freddie Mac mortgage.
Regionally, an additional 1,100 households in the San Francisco Bay Area
and 1,800 households in the five-county Southern California region will be
able to benefit from the increased loan limits, according to C.A.R.
economists.
The C.A.R. statistics do not include refinance activity.
Based on a typical 25 basis point spread between conforming and jumbo
mortgage loan rates, a typical California homebuyer will save up to
$19,900 over the life of a 30-year mortgage. In some areas of the state, the
recent spread between a conforming and jumbo loan has been as much as 40 basis
points. Households in these areas could save up to $32,000 over the life of a
30-year mortgage.
C.A.R. is supporting H.R. 3507, the "Improving Homeownership Opportunities
in High Cost States Act of 2003." This legislation will enable homebuyers in
California and other states to benefit from the federally chartered secondary
market opportunities designed expressly for areas with an exceptionally high
median-home price. Current law recognizes high-cost states and their need for
an increased conforming loan limit but is currently restricted to Hawaii,
Alaska, Guam and the Virgin Islands. H.R. 3507 would allow the local economic
climate of a state to dictate the necessity of an increase in its conforming
loan limit.
"Passage of H.R. 3507, introduced by California Representative Brad
Sherman, would enable many more deserving homebuyers to participate in the
benefits of the secondary mortgage market by obtaining conforming loans,"
Pettijohn said.
Fannie Mae and Freddie Mac also announced new limits for multi-unit loans
for 2004: two-family loans to $427,150; three-family loans to $516,300; and
four-family loans to $641,650.
The California Association of REALTORS(R) ( http://www.car.org ) is one of
the largest state trade organizations in the United States, with more than
130,000 members dedicated to the advancement of professionalism in real
estate. C.A.R. is headquartered in Los Angeles.
SOURCE California Association of REALTORS
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CONTACT:
Mark Giberson of California Association of
REALTORS, +1-213-739-8304, markg@car.org
