New conforming loan limits for ’09
Just what the conforming loan limit is on single-family homes and condos in Southern California -- it was raised last year to $729,750 in designated high-cost areas -- has been a continued source of confusion because it varies throughout the region. And for this year, it changed again.
For 2009, the maximum is $625,500. And that’s what it is for the Los Angeles-Long Beach-Santa Ana metropolitan area. But for Santa Barbara-Santa Maria-Goleta it’s $603,750; for Oxnard-Thousand Oaks-Ventura, $598,000; and for San Diego-Carlsbad-San Marcos, $546,250.
Does this matter to consumers? Don’t most lenders charge a higher rate on loans above the $417,000 limit that applies everywhere else anyway? Or does it just mean that at least money (even at higher rates) is available to borrowers seeking larger amounts?
Here’s how Keith Gumbinger, vice president of mortgage research firm HSH Associates, sees it:
“That the ‘expanded conforming’ program remains in place [even with a maximum limit of $625,500] is a good thing for at least some borrowers,” he said. “While the market is still adapting to the new program, it does seem at the moment that essentially there are several ‘tiers’ of costs for borrowers -- those for the $417,000 ‘true conforming,’ those for the tier between $417,000 and whatever the limit is in your area [expanded conforming] and that for ‘true jumbo’ mortgages, those over the limit in effect.
“Presently, borrowers below the $417,000 limit are finding rates in the low 5% range [30-year fixed]; those in the ‘tweener’ tier are finding rates somewhat higher than that [about 0.3 to 0.4 higher lately], and those in need of a ‘true jumbo’ are seeing rates near 7%. . . .
“Why should borrowers care? Less accessible -- or affordable, if you prefer -- financing serves to temper demand for housing, which in turn continues to pressure home prices downward. High rates mean little opportunity to refinance, and falling home prices make it more difficult to do so as equity disappears. This may trap some homeowners in mortgages they can no longer afford, and could even exacerbate the ‘underwater’ situation, too.”
-- Lauren Beale
