Rocket Pro TPO raises conforming loan limits to $750,000 ahead of FHFA decision

Wholesale lender raised conforming loan limits by 3.3%

Rocket Pro TPO, the wholesale arm of Rocket Mortgage, on Monday raised agency conforming loan limits to $750,000, ahead of the Federal Housing Finance Agency’s (FHFA) decision expected in November. 

Amid fiercer competition in a shrinking mortgage market, other lenders may follow suit in the coming days or weeks, as in previous years. Companies are pressured to launch new initiatives to attract brokers and land more purchase businesses due to high mortgage rates.

Rocket’s move shows that the mortgage lender is confident the maximum loan limit set by the federal government will rise by at least 3.3% in 2024 (the current limit on conventional loans is $726,200).

Through the government sponsored enterprises, the federal government for the first time ever in 2023 backed mortgage loans north of $1 million, with the new ceiling loan limit for one-unit properties in designated high-cost areas at $1,089,300 — or 150% of $726,200.

The 2024 increase expected by Rocket is lower than that imposed in 2023. FHFA’s baseline conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac in 2023 of $726,200 represented an increase of 12.21%, or $79,000, compared to 2022. 

Conforming loan limits usually follow the changes in home prices.

“It looks like from the second quarter [of 2022] to the second quarter [of 2023], that’s [home prices] up about 3.3%,” Mat Ishbia, CEO at wholesale-only lender United Wholesale Mortgage, said in a recorded video on Monday.

Ishbia added: “And so if things stay flat, we can see loan limits could go from $726,200 to over $750,000. That’s only a 3% or 3.5% increase. However, it’s pretty material and it’s a lot.”

It was always expected that lenders would increase loan limits ahead of the FHFA’s November announcement. 

The lender’s move, however, came later than last year’s conforming loan limit increases. In 2022, as rates were climbing and borrowers were dropping out of the market, lenders raised conventional loan limits in early September. Rocket announced on Sept. 6. Meanwhile, United Wholesale Mortgage followed suit the following day. 

The risk for Rocket and those that follow is limited; the Housing and Economic Recovery Act established a formula for increases in 2008 that mandated that the baseline could only rise after home prices returned to pre-recession levels.

That condition was finally met in 2016 when the FHFA increased the conforming limits for the first time in a decade. 

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