Well there has certainly been a buzz in our community around a recent article in the New York times, “Federal Retreat on Bigger Loans Rattles Housing.” Monterey County was the main character in this article serving as an example of an area that will be affected more than others when it comes to the loan limit change slated for later this year. Essentially, the federal government has been backing mortgages up to $729,750, a limit that has been in place for the past 3 years. The government is expected to drop this loan limit to $483,000 for Monterey County. Not all counties have the same loan limit. The limit is based on the median price in the county, among other factors. Monterey County really encompasses two very distinct markets: the Monterey Peninsula and the Salinas Valley. Therefore, our median price is brought down lower than other counties, where their loan limit will only drop 15% to $625,500. The NY Times article paints a nasty picture of increased downward pressure on pricing and fewer capable buyers. The bottom line is that yes, as I’ve stated before, loans are getting more expensive. Buyers will need to put down more to get a conforming loan, but, according to Bob Walker of Blue Adobe Mortgage, jumbo loans do exist. Bob predicts buyers getting a jumbo loan will see their interest rate rise 3/8 of a percentage point. He cautions sellers to think about this new loan limit when pricing their homes. “Sellers should price to sell, not negiotate,” says Bob, “and consider offering seller buy downs” to bring down the rate of the loan.
New Loan Limits Expected to Hit Monterey County
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