No significant action is expected when the Federal Open Market Committee meets tomorrow. This is in sharp contrast to the last meeting when the big splash known as the QE2 was annouced. In the QE2 announcement the Fed pledged $600 billion in bond purchases by the end of June next year to reduce interest rates and stimulate the economy. While there was plenty of skepticism at the time about whether it would work the early signs are not positive.
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December 14 Federal Open Market Committee Meeting – What to Expect
Tuesday, December 14th, 2010Good News for Potential Home Buyers and Troubled Home Owners
Friday, January 9th, 2009House Financial Services Chairman Barney Frank said that president-elect Barack Obama agreed to increase the upper limit on loans that Fannie Mae and Freddie Mac can purchase to $729,750 in high-cost areas. Known as conforming loans, Fannie Mae and Freddie Mac owned loans provide funds to borrowers at the lowest market rates.
The normal limit on borrowers for conforming loans is $417,000 but in expensive markets it was $625,000. The new limit only applies to the real estate markets that fall in the expensive designation, loan limits in all other markets will remain at $417,000. Last year in order to try to stimulate the moribund high end real estate market a temporary limit increase to $729,750 was enacted but that expired December 31, 2008.
