Though mortgage rates are falling, a Jan. 1 decline in the maximum size of a mortgage that Fannie Mae and Freddie Mac may buy or guarantee in certain costly U.S. housing markets is likely to push interest rates higher on larger home loans.Economic-stimulus legislation passed in 2008 lifted the loan limit in high-cost areas to nearly $729,750 from $417,000, but only through year’s end. On Thursday, the limit declined 14% to $625,500.Among the geographic areas affected by the change are metropolitan New York, Los Angeles, San Francisco and Washington
By Jenny Holzer, Jan. 2, 2009, WSJ

Link to article