Law’s impact on isle home buyers muted
The economic stimulus bill signed into law by President Bush yesterday might help some Hawaii homebuyers qualify to purchase homes, but the market's tightening loan standards may well make any forward moment a wash.
The new law will push Honolulu's FHA conforming loan limit from $417,000 to $729,750 for all homes bought through the end of this year. The increase will expand the number of mortgages in Hawaii that qualify for a lower interest rate and purchase by government housing authorities Fannie Mae and Freddie Mac.
Buyers can now get lower interest rates on what used to be considered "jumbo" loans, said Chason Ishii, president of Coldwell Banker Pacific Properties. In the past, the interest rates on these loans cost borrowers up to a full percentage point more than conforming loans, Ishii said.
"If you saw a dream home you couldn't afford last year, look again," Ishii said." Two trends are moving in the buyer's favor -- the price may have dropped, and you will be able to afford a bigger mortgage at a lower interest rate.
While the National Association of Realtors has estimated that increasing FHA loan limits will help an additional 138,000 Americans achieve homeownership and will allow nearly 200,000 homeowners to refinance, some mortgage brokers say that the move might have a more limited footprint in Hawaii.
The increase in the conforming loan limits won't necessarily help all Hawaii borrowers, said Zoebel Dela Cruz, principal broker of Mortgage Team Hawaii LLC.
"Those who don't have high enough credit scores or enough equity in their homes won't be able to take advantage of this change," Dela Cruz said. "At the same time, credit requirements are tightening and we are losing other loan programs."
It's too soon to tell how the change will play out in Hawaii's residential market, said Harvey Shapiro, research economist for the Honolulu Board of Realtors.
"I'm not sure if it will create an uptick," Shapiro said.
While it's been tougher for borrowers in some U.S. mainland markets to get approved for jumbo loans, Shapiro said that many people in Hawaii have been able to get financing for amounts above $417,000, which is well below the Oahu median.
"Still, in micro terms, all of these little changes are positive for the housing market," Shapiro said.