Loan ceiling lowered for first time

Home buyers who need mortgages of $188,000 or more got some badnews this week.

For the first time in at least a decade, the maximumconventional loan will decrease starting Jan. 1, the government said.The new maximum is $187,450, down $150.

Since 1985, the ceiling has risen dramatically from $115,000.

Loans above the ceiling are considered jumbo loans and lendersusually charge interest rates of 0.25 to 0.50 percentage pointshigher than on ones below the ceiling. That's because they can'tsell the jumbo loans to investors through the secondary market.

The Federal National Mortgage Association (Fannie Mae) announcedthe drop in its ceiling based on …