Fannie/Freddie 7% Mortgage Bond Limit

[Russell Brazil]

A lot of people have been talking about this new limit, without much perspective on the issue. The issue is that the GSE's, Fannie/Freddie are going to limit the number of 2nd homes and investor loans that get rolled into mortgage bonds that sell on the secondary market. That limit will now be 7%, with 93% being owner occupied loans in each bond.  

This 7% held absolutely no meaning to me.  Was it a lot, a little...there was no context.

But, now I have the context. I am on the NAR Conventional Financing Policy Committee, and Im actually on the Zoom call at this very moment discussing the issue.

Over the last 5 years, the general range on these has floated between 7% and 12%, with only 1 month going under 7% at 6.9%.  January is the most recent month with data available, and it was between 10% and 11% for that month.  So a drop from 11% to 7% is about a 35% drop.  Reports have been that the southeastern portion of the country is seeing the most dramatic pricing increases on the loans so far.

@Chris Mason