House 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.