The wheels are in motion for homebuyers to obtain a little larger mortgage at a little lower interest rate next year.
That is, it is now possible for Fannie Mae and Freddie Mac to boost the limit on loans they can purchase or securitize. The exact amount is anybody's guess right now, as is when it would happen, exactly. But one calculation puts the new ceiling at $422,000 for 2017 -- a bump of $5,000.
Over the last eight years or so, the two government-sponsored enterprises' regulator and conservator, the Federal Housing Finance Agency, has put the kibosh on hikes in the so-called conforming loan limit because of complaints that doing so would crowd out private investors in home loans. But right now, there is little to no private investment in the mortgage market. And with many would-be borrowers facing big-time affordability issues, it is believed that the FHFA may change its mind.
Under the FHFA's rule, Fannie and Freddie cannot raise their loan limit -- now $417,000 in most places, but higher in about 30 high-cost markets -- until indices show that housing prices have reached the level they were at prior to the Great Recession.
In the second quarter, all three of the agency's housing price measures hit the high-water mark set in the third quarter of 2007. The loan limit hasn't seen an increase since 2006.
This is important because the loans touched by Fannie and Freddie are often one-eighth to one-quarter percent less expensive than other loans. And with the Fed poised to kick interest rates a tad higher, an increase in the Fannie-Freddie limit looms even more significant.
Fannie and Freddie don't originate mortgages. Rather, they buy them from lenders on the secondary market and wrap them into securities for sale to investors worldwide.
Because of their implicit government guarantee that they will be paid whether borrowers make their payments or not -- and almost all do -- investors in Fannie's and Freddie's bonds are willing to take a slightly smaller yield. In other words, knowing your investment is safe is worth a few less shekels.
If the ceiling is raised, it will mean homebuyers will be able to borrow more money at a lower rate. Again, how much more, and at what rate, remains to be seen -- if there is indeed a change at all.
Typically, the move, if there is one, is announced over the Thanksgiving weekend. Stay tuned.
If you think housing prices here are too high, wait until you get a load of what's going on in other countries.
In China, house prices were up nearly 21 percent in the second quarter, according to the Global Property Report. Prices in New Zealand rose by only half that much, but that's still an incredible 10 percent.
Other high-flyers include Romania, Germany and Turkey, all three around the 10-percent mark.
But all is not so well everywhere. Values fell 12.5 percent in Russia and 11 percent in Egypt, Hong Kong, Mongolia and Montenegro.
It's a rocky world out there. Prices rose in 30 out of the 46 housing markets that have published statistics so far, the report said. But only 27 are showing market momentum in which prices are rising faster than they were at the same time a year ago.
Worthy of note: Europe's house-price boom continues unabated. Six of the 10 strongest housing markets in the global survey were in Europe. Prices rose in 17 of the 22 European housing markets for which figures were available.
To help mortgage lenders more accurately identify and potentially reward responsible credit behavior, credit reports now include so-called "trended data," which is up to the last two years of your debt repayment and credit balance histories.
Traditionally, mortgage lenders had access to a would-be borrower's outstanding credit balances, how he or she used credit and the overall availability of that credit. In other words, how much credit did your creditors extend to you, what percentage did you use, and did you make on-time payments?
While certainly helpful in assessing your ability to make mortgage payments, that information did not provide details on whether payments serviced all or part of your debt, and it did not show the pattern in which you used your credit.
Now, updated credit reports will provide a more comprehensive view of a borrower's debt-management practices, such as whether you paid off your credit card debt every month or whether you made just the minimum payment and incurred interest penalties.
Research by Fannie Mae found that, all else being equal, those who paid in full every month were 60 percent less likely to become delinquent on a mortgage than those who made only the minimum monthly payment.