New Conforming Loan Limits Are In Effect

·       Mortgage Rates¹ – At last some good news – It was a fantastic week for rates and our benchmark rate had dipped to 7.500% (7.564% APR).  The biggest news was that the Fed met this week and unanimously voted to hold the Federal Funds Benchmark rate, which was expected.  Fed Chair Jerome Powell’s remarks restated that future decisions would remain data driven, but with one more meeting left in 2023, there is a chance that we could end the year at current levels.  In addition to the news from the Fed, both Initial Jobless Claims and Continuing Claims came in above projections and the BLS Jobs Report was below projects – meaning that we had a tri-fecta of reports showing the labor market is tightening.  Investors took this as a positive sign that inflation is likely moving in the right direction and that the Fed could be done hiking rates, resulting in mortgage rates moving lower.

·       Weekly Market Data² – Active Listings remained relatively flat at 7,418, of which 819 were new listings from this past week.  Although the number of listings on the market for under 30 days was down slightly, it remained steady at 36% of total active listings, and once again leaves 64% in the ‘over 30 days’ category.  The total number of new contracts was down 12% at 672 for the week.  We saw a solid week of Closed sales popping up by 15% to 850 homes, with the Median Days on Market moving up to 20 days. (Source REColorado, all DMAR counties, this past week -Thursday to Wednesday).

·       Columbine Team Insight – We are continuing to see the seasonal cooling in the market with a slower week in the number of offers going out. We saw a 50% acceptance rate and with the one offer accepted at 100% list price (it was fresh on the market and primed to sell).  This reflects the trend of fewer total contracts this week for the Denver Metro area as well.

·       Market Trends – Every year the FHFA adjusts the Conforming Loan Limits to reflect the changes in home prices.  The conforming loan limit is determined on a county-by-county basis and sets the maximum loan amount that a borrower can borrow while still qualifying for a conforming loan.  Over the past 7 years, the Conforming Loan Limit has increased from $417,000 in 2016 up to $726,200 for 2023.  The FHFA typically announces the new conforming loan limits around the end of November, however, some lenders predict what they believe the new limit will be and begin accepting locked loans with loan amounts up to that new limit.  This year, several of our lenders are getting out in front of the official announcement and are accepting loans up to $750,000 (a 3.28% increase) in anticipation of the new limits.  What this means for you (as a borrower) is that you may be able to now qualify for a larger loan and staying within conforming loan guidelines (which can help with lower interest rates).

NOTES:

(1)     The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 7.500%, and a P&I payment of $3,356.  The Annual Percentage Rate (APR) is 7.564% with a 0.243% lender credit ($1,166).  Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher.  Interest rates are current as of 11/02/2023 and are subject to change at any time without notice.  All loans are subject to credit approval.  Other terms and conditions may apply.  Not all loans or products are available in all states.  Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.

(2)     Source: REColorado®, Inc for the period 10/26/2023 to 11/01/2023.   Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.