Loan limits for most mortgages Fannie Mae and Freddie Mac buy will exceed $500,000 for the first time ever next year, and the maximum for most high-cost areas will be $765,000.
The agencies are weighing a plan to reduce the scope of residential real estate transactions requiring an appraisal, but appraisers have warned that the proposal could have consequences.
The mortgage industry heads into 2019 with little relief from the market strains of the past three years. To succeed — or at least survive — lenders must confront major questions about demand, affordability and market consolidation.
A proposal allowing more lenders to skip outside appraisals could remove a hurdle to quick closings, but appraisers say they could be collateral damage.
Home prices are rising and first-time buyers now account for an increasing share of sales, factors that could lead to a surge in defaults during the next economic downturn.
The sustained rise in home values will boost Fannie Mae and Freddie Mac's loan limits for 2019, marking the second consecutive year in which it increased by nearly 7%.
The effort to raise the threshold for transactions excused from appraisal requirements responds to concerns that the current threshold is outpaced by real estate prices.
