Third-party mortgage lenders United Wholesale Mortgage and PennyMac are jumping forward and increasing their compliant credit limit ahead of the Federal Housing Finance Agency's official announcement.
The agency typically announces the new compliant credit limits by the end of November, based on a formula that takes home price trends into account. Changes in compliant credit limits will also affect the Federal Housing Administration program.
Given that house prices continue to rise – as the market of sellers cools – while the inventory shortage persists, it is a surefire thing that FHFA will raise the limits for 2022.
But both UWM and PennyMac increased their compliant limit to $ 625,000 for most one-unit properties with immediate effect. For Alaska and Hawaii, which have higher legal limits, the new limit is $ 937,500.
Fannie Mae / Freddie Mac's current credit limit is $ 548,250, up more than 7.4% from the 2020 amount. The expansion limits offered by UWM and PennyMac are about 14% above the 2021 amount.
For certain high-priced counties across the country, PennyMac's broker channel will be up to $ 822,375, according to a table from the company.
"With the recent spike in home price hikes affecting many markets across the country, we wanted to step in and support borrowers," said Kimberly Nichols, PennyMac's senior managing director of broker direct lending, in a press release. "This will especially help those looking to buy a home or gain access to equity in their property while prices are relatively low."
The higher compliance limit also applies to the PennyMac correspondent channel.
It's unclear whether other correspondent and wholesale lenders will follow in the footsteps of PennyMac and UWM; NMN has contacted several competitors and has not yet received a response.