Industry NewsMortgage

Fannie, Freddie to buy bigger loans

Move means lower rates on many mortgages up to $729,750

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Fannie Mae and Freddie Mac are once again set to begin buying "super-conforming" mortgage loans of up to $729,750, which should bring rates down for borrowers with good credit seeking loans previously classified as jumbo.Currently, loans greater than the $417,000 conforming limit in "normal" housing markets -- or the super-conforming limit of up to $625,500 in high-cost markets -- are considered jumbo loans. Jumbo loans carry higher rates than conforming loans because they aren't eligible for purchase or guarantee by Fannie Mae and Freddie Mac. Rates on jumbo loans are running at least 1 percent to 1.5 percent higher than conforming loans of less than $417,000. In between conforming and jumbo loans are so-called super-conforming loans that exceed the $417,000 conforming loan limit, but are still eligible for purchase or guarantee by Fannie and Freddie. Super-conforming loans carry slightly higher interest rates than conforming loans -- about 25 to 30 basis points -...