Awkwardly and inconsistently, the federal government is reducing its role in the mortgage market.
This will make some traditional mortgages, particularly jumbo mortgages, impossible to obtain. It will make the remaining mortgages more expensive and more demanding to obtain.
Overall, a reduction in government intervention into the mortgage market will allow the market to work more efficiently.
The reduction in jumbo loan guarantees will particularly effect pricey housing in New York and California.
FOR most potential buyers, the impending change in mortgage limits is just another obscure wrinkle in federal policy. But for some New Yorkers, it could mean the difference between buying and not buying a new home.
On Oct. 1, when the limit on federally guaranteed loans drops to $625,500 from the current level of $729,750, hundreds of buyers in the city and nearby suburbs will either have to come up with larger down payments to stay under the new limit or face the prospect of applying for jumbo loans — anything above $625,500 — which have higher interest rates.
For some buyers, neither option will be viable, and they have set Sept. 30 contract deadlines in hopes of closing on their new homes before the change kicks in.