Mortgage Lowdown

The Office of Federal Housing Enterprise Oversight recently announced that it would freeze the size of so-called conforming loans that carry lower interest rates. This announcement was made after U.S. home prices fell in October for the first time in 13 years.

The average price of a single-family home fell 0.2% to $306,258 in October. This is supposed to be the first decline in prices since 1993. Data from 14,729 loans made by 82 different lenders is used to tally the average home price. The agency is expected to freeze the conforming-loan limit at $417,000 and defer for one year the reduction mandated by law to reflect the October price decline. The decline in prices is attributed to the cautions attitude adopted by potential buyers who are waiting for prices to stop falling. This means the housing market is flooded with unsold properties.