Mack truck is headed into the Manhattan market

(Source: Mack Truck Inc.)

When the government lowers its limit for an insured mortgage loan starting Oct. 1, the impact on our housing market may well prove to be staggering.

I confess that I hadn’t focused on the consequences until the New York Times rang alarm bells on Wednesday in a Page 1 story headlined “Federal Retreat on Bigger Loans Rattles Housing.”  In it, David Streitfeld writes:

But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.

The maximum government-insured loan limit through September in high-cost areas such as ours had been raised to $729,750 as the nation reeled from horrifically deflating house prices across the nation.  The new limit