New Financing Limits Set for 2023 As Housing Market Continues to Cool

Weekly statistics for the Huntsville/Madison County residential real estate market, compiled by the Huntsville Area Association of Realtors (HAAR), continues to show a trend of general slowdown. 

The report, accurate as to December 10, 2022, shows that both new listings and pending sales for single-family units continued to decrease, with listings down 27% and pending sales down by 24%. Inventory continued to rise, with a 78.5% increase raising the number of units available to 2,913.

This mirrors national trends, which have seen the real estate market cool under the effect of both inflation and sharply-rising interest rates. However, new developments from Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp (Freddie Mac) demonstrate efforts to thaw the market by raising the cap on mortgage limits. 

The conforming loan limit on mortgages acquired from Fannie Mae or Freddie Mac will be raised in 2023, to $726,200, up from $647,200 in 2022. The conforming loan limit on designated “high-cost areas” will break the one million dollar mark for the first time in 2023, reaching $1,089,300.

Raising the conforming loan limit will enable more potential borrowers to qualify for mortgages.

This is aimed to counter the freezing-out of potential borrowers disqualified by the rising interest rates that we saw over the course of 2022, which, in theory, should get more people buying again, and lubricate the cogs of the real estate market and get it well underway once more. 

Meanwhile, the Federal Housing Finance Agency (FHFA) set its multifamily housing goals for Fannie Mae and Freddie Mac.

This rule governs Government Sponsored Enterprises (GSEs) that obtain mortgages, mandating that a certain percentage of units purchased be made affordable to low-income families.

Additionally, GSEs will have to notify the FHFA and receive approval from the agency before offering “new” products or services. 

FHFA Director Sandra Thompson explained the new rule as a measure to protect the public. 

“Enterprise activities can have significant effects on the mortgage market, consumers, and industry stakeholders, and today’s rule further refines FHFA’s process to ensure activities continue to serve the Enterprises’ mission while maintaining high standards of safety and soundness.” 

These actions from the FHFA show that it is undertaking the attempts to un-jam the housing market with careful consideration as to the potential ramifications.