The decision on when to pull back government support for the housing market has been delayed. On Tuesday, the regulator of Fannie Mae and Freddie Mac said that the maximum size of U.S. home loans that Fannie and Freddie can buy will hold steady in 2014. The Federal Housing Finance Agency said that the maximum that mortgage financiers can purchase remains at $417,000 in most areas and $625,500 in markets like Los Angeles and New York, which are more expensive.
Reuters reports that loan limits were raised in 2008 to “help keep the mortgage market liquid during the financial crisis, and the agency had begun to consider lowering them as the housing market recovered to allow private capital to support more home loans.”
The FHFA explained that their announcement Tuesday was brought about by the condition of the housing market, which they say is not strong enough for limits to be lowered right now. Reducing limits, some say, could shut buyers out of the market and delay the housing recovery. However, according to Reuters, analysts argue that this would only apply to a small 2-3 percent sliver of the market.