Fannie Mae, Freddie Mac Loan Cap to Rise

Federal regulators allowed mortgage finance giants Fannie Mae and Freddie Mac to buy larger individual mortgages next year after a jump in home prices, a move that would lower borrowing costs for buyers of more expensive homes.

The cap on a mortgage the two government-sponsored enterprises can buy climbed to $359,650 from $333,700 after a report that the average U.S. single-family home price surged in October by 8.5% to $264,540 from $243,756 in the same month a year ago. Low mortgage rates fueled record home sales and strong price appreciation in most regions of the country, according to a Federal Housing Finance Board survey.