A couple of developments in the race to qualify more borrowers for “conforming loans”, meaning they would benefit from access to lower interest rates.

* Rumor has it that Fannie Mae & Freddie Mac may require 10% down on any new loans; this means that fewer borrowers will have access to lower rates, because many people finance 95% or even 100% of their purchase price (whether or not buyers should, is another question, yes). (We were already likely to have this higher down payment requirement enforced, as we are in a “declining market” in Massachusetts);

* Yesterday, I read a report which estimated that the new conforming loan limit in Massachusetts might be as high as $520,000, up from today’s limit of $417,000.

This is because the new conforming loan limits are set to be 125% of the median sales price in any metropolitan area.

Well, that estimate was based on median third-quarter 2007 sales prices.

Fourth-quarter 2007 sales prices dropped.

Here’s an estimate of the new conforming loan limit:

Boston-Cambridge-Quincy, Mass.
Median price, 3rd-quarter: $414,600
Median price, 4th-quarter: $380,700
Drop: -8.2 percent
New estimated conforming loan limit: $475,875

Meaning, when all is said & done, far fewer borrowers will qualify for the lower rates.

Meaning, the effect on the real estate market and general US economy may be little, or none.

Wait, what was the point of this, to begin with?