A few weeks ago the National Association of Home Builders put out a report asserting that new lower loan limits going into effect in October at Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) “will reduce housing demand and place downward pressure on home prices in major housing markets.”

On the blog that day, I wrote that the games were only beginning.

Now another report, this time from researchers at George Washington University, is suggesting just the opposite, that lower loan limits may raise cost for a very few borrowers, but overall will not affect most mortgage shoppers.

The report focuses on the FHA, claiming, “The FHA still could serve 95 percent of its historic targeted market even if the maximum FHA loan limit were reduced by nearly 50 percent.” Its market share right now (30 percent) far exceeds its target population.

“FHA’s expansion played a major role in keeping the housing market afloat during the economic collapse of 2008 and 2009,” said Robert Van Order, co-author of the report. “However, we now are left with large loan limits that were set when home prices at the top of the bubble. They don’t reflect current market conditions and are unlikely to assist the FHA in reaching its historical constituencies – first time, minority and low income homebuyers.”

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