More than 12,960 families in California will be able to benefit from the increase in the Fannie Mae and Freddie Mac single-family mortgage loan limit in 2005, according to the California Association of Realtors. The secondary mortgage companies’ federal regulator increased the loan limit from $333,700 to $359,650 beginning next year.

But the California Realtors say the increase still falls short of what California home buyers need.

“Once again, although the new conforming loan limits will help some home buyers qualify for a lower-cost loan, they do not go far enough to benefit most home buyers in California,” C.A.R. President Jim Hamilton said.

“The median price of a home in California is 28 percent higher than the new loan limits announced today,” he said. “Conforming loan limits need to more accurately reflect the cost of housing in California.”

The current median home price in California is $460,370, an increase of 21.4 percent compared to a year ago and more than 28 percent higher than the national conforming loan limit of $359,650. In addition, California has 17 counties with a median-home price above the national conforming loan limit.

Based on its 2005 sales projection, C.A.R. expects that 301,670 sales in the state will fall into the price range implied by the higher loan limits, an increase of 33,450 homes over the 2004 loan limits. The $25,950 increase in the single-family mortgage loan limit translates into an additional 12,960 households able to take advantage of savings provided by having a Fannie Mae or Freddie Mac qualifying mortgage.

Regionally, an additional 3,500 households in the San Francisco Bay Area and 5,580 households in the five-county Southern California region will be able to benefit from the increased loan limits, according to C.A.R. economists.

The C.A.R. statistics do not include refinance activity.

Based on a typical 25-basis-point spread between conforming and jumbo mortgage loan rates, a typical California home buyer will save up to $21,400 over the life of a 30-year mortgage. In some areas of the state, the recent spread between a conforming and jumbo loan has been as much as 40 basis points. Households in these areas could save up to $34,350 over the life of a 30-year mortgage.

Fannie Mae and Freddie Mac also announced new limits for multi-unit loans for 2005: two-family loans to $460,400; three-family loans to $556,500; and four-family loans to $691,600.


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