Fannie Mae's and Freddie Mac's conforming limits for next year are set to increase soon, and analysts are predicting agency limits to top $400,000 next year.

The computation of the new limits is based on the Federal Home Loan Board survey's average home price from October through October. Merrill Lynch analysts noted that as of August, the average price in the FHFB survey was $301,900, approximately 14% higher than last October's $264,540 figure. Barring a significant decline in the FHFB survey average in September and October, Merrill analysts estimate the 2005 conforming limit to be roughly $410,000.

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