Before you rejoice too much about the new loan limits, consider this:
1) The new loan limits won't be set until March 14 so you'll have to wait until then to find out what they'll actually be.
2) Though the new limits are required by law to be set by March 14, this allowance will not go into effect until July 1, 2008 and loans must be funded and closed prior to December 31, 2008.
3) These new loans have a maximum 90% LTV so be prepared to put 10% down.
4) The way these new â€œjumbo conformingâ€ loans are structured and sold on the open/secondary market may actually cause the rates to increase on those loans, as well as current conforming loans under $417K. These new loans could potentially freeze up loan markets due to illiquidity. This would wreak additional havoc on the lending and housing markets.
5) There is not a set date by which Fannie, Freddie, Ginnie, SIFMA, HUD and everyone else involved have to work out the liquidity issues. Who knows when that will happen or whether the affects will be positive or negative on the housing market.