Mortgage limits for Fannie Mae and Freddie Mac finally raised

Although the congressional fiscal stimulus legislation had raised the price limits for conforming mortgages that Fannie Mae and Freddie Mac could buy, it wasn't until today that the regulators for Fannie and Freddie finally raised the limit for the total dollar volume of mortgages that Fannie and Freddie can hold. Fannie and Freddie had been unable to buy additional mortgages since they were bumping into that limit.

Mortgage rates had risen moderately in the past two weeks, probably because banks were relectant to continue holding mortages unless the rate of return was higher, but soon those banks will be able to sell mortgages to Fannie and Freddie, so I would expect mortgage interest rates to decline somewhat.

This is really positive news for the mortgage and housing markets, but we will have to see how it plays out over the coming weeks and months.

-- Jack Krupansky