Last week Fannie Mae and Freddie Mac announced new conforming loan limits for next year would be increased 16% to $417,000 from $359,650 - the largest annual rise on record in both percentage and absolute dollar terms. The limit, determined by the Office of Federal Housing Enterprise, is based on average federal home price data.

David Montano, head of mortgage research at JPMorgan Securities, said that while expected, the impact of the increase would likely be very substantial, especially considering slowing home price appreciation. He added that agency securities would be forming a larger share of the mortgage market with loan limits growing faster than median home prices.

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