WASHINGTON—The federal government said it now plans to backstop mortgages of more than $1 million for the first time in high-cost markets, including portions of California and New York.
The increase reflects the rapid appreciation in home prices over the past few years, even as the mortgage market has recently cooled, noted the Wall Street Journal in its analysis.
The Federal Housing Finance Agency said the maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac will rise to $1,089,300 next year in a few expensive markets, from $970,800 this year.
For most parts of the country, loan limits will rise to $726,200 from a 2022 maximum of $647,200, according to the FHFA.
100 Counties Affected
The FHFA said that overall, about 100 counties and county equivalents, out of more than 3,000 across the U.S. are designated as high-cost markets, also including some in New Jersey, Virginia and Utah.
“The increase may make it easier and cheaper for borrowers purchasing one-unit homes, particularly those near the limits,” the Journal reported. “The higher limits are also likely to renew a debate about how big of a mortgage is too big to be backed by the government.”
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