Those limits were raised in 2008 from a general rate of $417,000 for single-family homes to $729,750 in some areas in order to stimulate the economy. Next month, they will fall back to $625,500. The National Association of Home Builders estimates the changes will affect 2 percent of the nation’s homes, but more in certain areas like New York City’s where the market is expected to be affected at a greater rate. Some estimates are around 10 percent.
According to USA TODAY, many major lenders, including Wells Fargo and Bank of America, have stopped taking new applications for affected loans so that those in pipeline will close by the deadline. Some lenders are “buried” given the rush to close deals before the changes and the mini-refinance boom driven by low rates.
How will this affect the luxury home buyers? With jumbos loans, borrowers could see a 4.5 percent interest rate go to about 5 percent. Down payments of 20 percent may become the norm. The federal move could have some buyers considering less pricey homes.
