Fannie Mae and Freddie Mac may soon be extending their reach still further into the conventional mortgage market next year. And that will mean somewhat lower rates for folks needing loans in the $252,000 to $272,000

The ceiling on single-family loans that can be purchased or securitized by the two secondary mortgage market giants is determined annually by changes in the average cost of homes sold from one October to the next. So it won’t be until the end of the month that the government sponsored enterprises announce their 2001 loan limit.

But if September was the benchmark month, the so-called “conforming” loan limit – mortgages at or under the ceiling conform to Fannie-Freddie requirements – would rise by 7.6 percent starting Jan. 1 to $271,900. The current ceiling is $252,700.

Because of their government connections and the safety that association connotes, the GSEs have the ability to attract investors who don’t require profits as great as they’d won’t if they were putting their money in, say, widgets instead of good old American mortgages. As a result, interest rates on loans that are touched by Fannie and Freddie are usually 0.25 to 0.5 percent lower than the rest of the market.

A jump of $19,200 would be second largest ever recorded. Only the increase of $19,850 from 1986 to 1987 was greater.

While it remains to be seen what the Federal Housing Finance Board’s October survey will bring, it is worth noting that the average price of houses sold during the first five days of September in 31 markets around the country – $199,900 – was only the fourth highest recorded this year.

The average in each of the three previous months were all greater – $202,500 in June, $201,700 in July and $201,200 in August. The last time the average was below $190,000 was in February, when it was $189,800.

In September 1999, the average was $185,000. It dipped to $184,500 in October, but that was still high enough to drive the loan limit higher by $12,700, which represented a 5.3 percent increase from the average in October 1998 of $175,200.

Last year’s hike was in line with those of the previous two years.

Published: November 6, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.