How the FHFA and Federal Reserve will change the mortgage industry in 2022 - Movement Mortgage Blog

This past week was anything but boring in the mortgage industry as a lot of extremely important moves were made that will greatly affect homebuyers in 2023. 

The first big headline we want to break down for you is the change in the conforming loan limits. What are conforming loan limits? That is the limit set each year by the Federal Housing Finance Agency (FHFA) as the maximum amount for a mortgage loan that can be purchased by the government-sponsored enterprises Fannie Mae and Freddie Mac. The FHFA raised the limits by a significant 18% moving it from $548,250 to $647,200. For areas considered to be high-balance, the limits were raised to $970,800.

For all you first-time homebuyers out there, this is good news for you. Because home prices have gone up by so much your home loans will go up as well; but, the rise in the conforming loan limit means you can still put as little as 3% down as a first-time homebuyer on a $667,000 home through a Federal Housing Administration (FHA) loan if you qualify. The best thing to do is to contact your Movement Mortgage loan officer to see if you qualify and get pre-approved before going shopping for that new home. 

The next big piece of news is that home price growth has finally slowed down—albeit, not by much. The latest S&P CoreLogic Case-Shiller National Home Price Index shows home prices rose by 19.5% annually in September. That is down from 19.8% the previous two months. It may not seem like a big decrease but this is the first time since May 2020 that home price growth has slowed. That is a huge deal moving into next year. 

On the economic side, comments from Federal Reserve Chairman Jerome Powell sent some shockwaves through the stock market with the Dow dropping 650 points based on Powell’s remarks. During his regular testimony before a Senate committee, Powell walked back his sentiments on inflation and will stop using the word ‘transitory’ to describe it. Instead, Powell was more direct in his testimony saying, “At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner.” 

The asset purchases Powell is referring to are the $120 billion worth of Treasuries and mortgage-backed securities (MBS) the Fed started purchasing monthly starting in March 2020. Those purchases have helped buoy the housing market and kept interest rates at or near historic lows for nearly two years. 

Speaking of interest rates, the latest average from Freddie Mac on a 30-year fixed-rate mortgage came in at 3.11% this past week. There may be a slight dip in the average this next go around because of the decrease in the 10-year Treasury note thanks both to Powell’s tapering comments and the reports of the Omicron variant of COVID spreading.

Jobs report falls woefully short

The November Jobs Report from the Labor Department showed a paltry 210,000 jobs added for the month—far below the Dow Jones estimate of more than 570,000. The unemployment rate dropped to 4.2% which was better than the 4.5% expectation. 

The private sector fared much better in November adding 534,000 jobs according to ADP’s data. Interestingly, hospitality and leisure led the way for private payrolls while that same sector struggled in non-farm payrolls (which are measured by the Labor Department’s Jobs Report).

About the Author:

Movement Staff

The Market Update is a weekly commentary compiled by a group of Movement Mortgage capital markets analysts with decades of combined expertise in the financial field. Movement's staff helps take complicated economic topics and turn them into a useful, easy to understand analysis to help you make the best decisions for your financial future.