Government Backed Mortgage Agencies Reducing Their Loan Limits

Tenafly - Luxury High End Homes

The NY Times ran a front page story on the Business Day  page on May 10th about the government-backed mortgage agencies (Fannie Mae/Freddie Mac/FHA) reducing their loan limits as of  September 30^th 2011 and the expected  impact on the “high end” housing market.

The tone of the article and the implied effects this may have nationally  are rather dire. The good  news is that this is not as significant  in Bergen County towns such as Tenafly, Alpine, Cresskill, Englewood , Englewood Cliffs and Demarest and other affluent towns   as it is in other parts of the country.

According to Steve Grossman Vice President of  New Jersey Lenders ,

New Jersey  has more liquidity with jumbo mortgages than any other state in the country.  As long as a borrower can put 20% down, they can obtain financing up to $1,500,000 Million.

The only segment of the market that is being eliminated is consumers who need to borrower between $625,000 and $729,000 with less than 20% down.   If and when the loan limits decrease, the maximum mortgage with less than 20% down will be $625,000.

In my opinion, says Grossman,  the loan limit reduction will have a very small impact on our local market.