What a double-whammy.
The deadline for getting what is known as a conforming jumbo loan is closing. As of Jan. 1, the maximum for loans that Fannie Mae and Freddie Mac are willing to buy will decline from $729,750 to $625,500 in the nations priciest areas.
Also, beginning Jan. 1 … most buyers [will be required to] put down 20 percent and have a debt-to-income ratio as low as 30 percent, according to the trade publication Inside Mortgage Finance.
Now, you might think this is a good thing – if it’s going to cost more to borrow money and if buyers will have to have more money for a down payment, then there will be less of a pool of buyers available, which means sellers will have to lower their homes’ prices to get people interested.
In theory. As we’ve seen, in Boston, at least, is that prices have been “sticky” during the past year-to-two-years, and sellers have been reluctant (unwilling?) to listen to reason and lower prices. Leading to what we’re calling a “stand-off”.
Sellers see profits on paper, and are apparently willing to hold-off making any moves that would lower their expected gains. Whether or not things will go their way, is an open question.
Source: Deadline Nears for Dropping Jumbo Loan Limits – By David M Dickson, Washington Times