by Calculated Risk on 1/06/2009 12:37:00 PM

From the Boston Globe: Jumbo mortgage loan rates put damper on refinancing (hat tip Soylent Green Is People). The article notes the difference between conforming loans (below $417K), "conforming jumbo loans" (by MSA), and jumbo loans:

Last year, Congress raised jumbo limits when it allowed Fannie Mae and Freddie Mac to buy or guarantee higher-balance loans. In Massachusetts, the limit increased to $523,750, from $417,000, with jumbo loans being above the higher amount, and conforming jumbos between the two figures.

The Federal Housing Finance Agency recently recalculated the loan limits for 2009, as required by law, based on recent home sales.

That resulted in the jumbo limit for the Boston area being lowered to $465,750, meaning some borrowers who would have qualified for lower rates in December are now back in the jumbo category.
...
On Friday ... one lender was offering a 5.25 interest rate for conventional loans, 5.75 percent for conforming jumbos, and 8 percent for jumbos.

Apparently Barney Frank wants to increase the conforming jumbo limit:

US Representative Barney Frank, Democrat of Massachusetts, said Friday that he wants jumbo limits to be raised again - to the previous level, if not higher.

Frank, chairman of the House Committee on Financial Services, pledged to include a provision for this in the economic stimulus bill Congress is expected to take up with President-elect Barack Obama. He also wants to change the way the loan limits are calculated to reflect real market conditions.

"Even if you accept the principal we shouldn't be financing luxury housing; what's a luxury house in Nebraska is an average house in Quincy," Frank said. "I'm lobbying hard to get at least last year's level to be put back where it was."
emphasis added