Last week’s economic news included FHFA’s pending announcement of new conforming loan limits for single-family mortgages sold to or guaranteed by Fannie Mae and Freddie Mac and the Federal Reserve’s Federal Open Market Committee’s post-meeting statement. Weekly readings on mortgage rates and jobless claims were also released.
Mortgage Lenders Anticipate FHFA Increase in Conforming Loan Limits
The Federal Housing Finance Agency has not officially announced its conforming loan limits for single-family homes in 2022, but that hasn’t stopped some lenders from raising their loan limits from 2021’s maximum conforming loan limit of $548,250 to the expected maximum loan limit of $625,000 for mortgages on single-family homes. FHFA defines single-family homes as one-to-four-family residences.
FHFA oversees Fannie Mae and Freddie Mac and determines their lending policies and requirements for purchasing or securitizing mortgage loans from approved lenders. FHFA is expected to announce 2022 limits for conforming single-family loans sometime in November. Raising loan limits will accommodate rapid increases in home prices and enable lenders to originate conventional mortgages without additional costs associated with “jumbo” loans, which exceed the conforming loan limit.
Fed Policymakers Leave Key Rate Range Unchanged
The Federal Open Market Committee of the Federal Reserve did not raise the key federal interest rate range of 0.00 to 0.25 percent, but members agreed that accommodative monetary policy will be phased out by reducing upcoming purchases of Treasury bonds and mortgage-backed securities. The Fed is also expected to raise its key interest rate, with two or more rate hikes possible in 2022 to 2023. Fed Chair Jerome Powell emphasized that accommodative measures will no longer be needed if the economy continues to grow at its current pace. Mr. Powell also said that the Fed will adjust monetary policy as needed based on changing conditions.
Mortgage Rates, Jobless Claims Fall
Freddie Mac reported lower mortgage rates last week; the average rate for 30-year fixed-rate mortgages was five basis points lower at 3.09 percent. Rates for 15-year fixed-rate mortgages averaged two basis points lower at 2.35 percent. The average rate for 5/1 adjustable rate mortgages was 2.54 percent and two basis points lower than in the prior week.
New jobless claims fell to 269,000 initial claims filed from the prior week’s reading of 283,000 claims filed. Analysts expected 275,000 initial jobless claims to be filed. Continuing jobless claims were also lower last week; 2.11 million ongoing claims were filed as compared to the prior week’s reading of 2.24 million continuing jobless claims filed.
What’s Ahead
This week’s scheduled economic reporting includes readings on inflation and weekly reports on mortgage rates and jobless claims.
The Federal Reserve’s Federal Open Market Committee considered easing monetary accommodations implemented in response to stronger economic conditions according to its post-meeting statement issued November 3. The Fed started making trillions in monthly bond purchases when the pandemic started but slowed its purchasing pace to $120 billion per month in June 2020. The Fed will soon reduce its monthly bond purchases to $105 billion monthly.
