Chicago-based Guaranteed Rate raised agency conforming loan limits to $750,000 on Monday, representing an increase of 3.2% compared to the current limit of $726,200.
“We raised the conforming loan limits to $750,000 on our Fannie Mae and Freddie Mac 30-year fixed. This is in anticipation of the loan limit increase for 2024,” Kate Amor, senior vice president and head of enterprise products at G-Rate, said in an interview with HousingWire during the HW Annual conference held Oct. 10-12 in Austin.
G-Rate is the second mortgage lender to announce it raised the agency conforming loan limits ahead of the Federal Housing Finance Agency’s (FHFA) decision in November. It followed the announcement made by Rocket Pro TPO, the wholesale arm of Rocket Mortgage, on Oct. 2.
Other lenders may follow Rocket and G-Rate, although the moves are coming later this year than in 2022. Last year, lenders like Rocket and United Wholesale Mortgage raised conventional loan limits in early September.
According to Amor, raising the loan limits lets G-Rate “move closer to the general market.”
“But I also think it puts more pressure on the jumbo market as loan amounts will get higher. And, obviously, there are capital constraints happening.”
HousingWire reported that top jumbo lenders have pulled back on the product over the last year due to surging mortgage rates and regulatory risks. Some regional banks working in the space collapsed due to a tightening monetary policy and a deposit run.
Meanwhile, others have limited jumbo purchases from smaller lenders via the correspondent channel.
The risk for Rocket, G-Rate and others of raising the limits ahead of the FHFA is limited.
The Housing and Economic Recovery Act established a formula for increases in 2008 that mandated that the baseline could only rise after home prices returned to pre-recession levels. That condition was finally met in 2016 when the FHFA increased the conforming limits for the first time in a decade.
Usually, conforming loan limits follow the changes in home prices.