A couple weeks ago, there was the announcement that conventional (Fannie Mae and Freddie Mac) loan limits were increasing in January to $484,350. FHA also increased their limits effective with FHA case numbers ordered on January 1, 2019. In the Minneapolis/St Paul metro area, the new limit is $366,850. This was an increase of about $10,000.
Both these increases will help those trying to buy homes this spring. Typically conforming guidelines are less strict than non-conforming and usually those interest rates are also a bit lower. For those looking to use FHA financing, the increase will help with the buyers looking in those price ranges.
This week the Federal Reserve had their December meeting. It was widely anticipated that the Fed would raise the short term interest rate by .25%Â and that did happen. Because it was expected, it really didn’t affect long term mortgage rates. The announcement also came with a change in the statement regarding future increases. Previously the Fed had stated they expected at least 3 rate increases next year. Now they may be softening their stance and will watch economic recovery – if inflation stays in line, they will watch to see if they need to increase rates. They want to keep the economy moving but may not make as many rate increases.
Some experts are concerned that short term rate increases will slow the economy. If this happens, it could actually lower long term mortgage rates due to instability in the stock market. We’ll see what happens in 2019, but hopefully this will keep mortgage rates a bit lower than originally expected – if so, it could help the housing market.
Rates are a bit better than they were a month ago – if you are thinking about buying or refinancing, it’s a great time to check in and see what you can do!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
