Both chambers of Congress recently passed a resolution extending current conforming loan limits through December 31, 2010. The resolution, signed by President Obama on November 6th, sets the maximum conforming loan sizes that can be bought or guaranteed by Government Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac. This extension maintains the regular conforming limit of $417,000 and the high-balance conforming limit for Marin and other Bay Area counties up to $729,750. Without the extension, the maximum conforming loan would have been reduced to $625,500 at year's end.
Because they receive federal support, conforming loans carry significantly lower interest rates, especially for 30-year fixed pricing. Over the past month, 30-year fixed conforming loans to $417,000 have averaged 4.75% (APR 4.88%) and high-balance conforming to $729,750 have averaged around 5.00% (APR 5.12%). By comparison, non-conforming jumbo loans average approximately 1% higher in rate for 30-year fixed terms. Because of this disparity, most borrowers of jumbo loans above $729,750 and up to $5 million opt for shorter term 5-year or 10-year fixed ARMS with rates as low as 4.875% (APR 4.948%).
High-balance conforming limits are set at 125% of a county's median home price and are capped at $729,750. Home prices in the Bay Area are among the highest in the nation and Marin, San Francisco, and San Mateo counties all qualify for the product's maximum limit of $729,750. (The median price demarks the figure where half the homes sold within a given market and period of time sold for more and half for less.) As conforming loans favor down payments of 20%, the high-balance product lends strong support to a purchase price of $912,000. Given recent market corrections, prospective buyers have lots of options in Marin's more affordable towns such as Novato, San Rafael, and Fairfax. Even Marin's traditionally more expensive real estate offers attractive purchase opportunities within this range and nice homes can be found in towns such as Tiburon, Mill Valley, and Greenbrae.
Included in the Congressional resolution's preservation of the $729,750 limit was an extension and expansion of the homebuyer tax credit. It is expected that these efforts will provide continued stability and vitality to Marin's housing market through 2010.
Nicholas Ballard is both a mortgage broker and banker specialized in the residential Marin and San Francisco markets. For assistance, please call or email:
Nicholas Ballard: 415-526-1941; firstname.lastname@example.org
CA Dept. of Real Estate # 01356374
California Mortgage Advisors, Inc.
CA Dept. of Real Estate # 011708684304
Redwood Highway, Suite 100
San Rafael, CA