My non-educated gut tells me that the increase in conforming limits could end up raising rates because of the marked increase in refi activity – What do you think?

Here is the article that was in the WSJ today:

Congress, White House Complete
Deal on Economic Stimulus Package
Plan Includes Tax Rebates, New Limits
On Fannie, Freddie Conforming Loans
By SARAH LUECK
January 24, 2008 1:29 p.m.

WASHINGTON — Democratic and Republican congressional leaders completed a deal Thursday with the White House on an economic stimulus package that would give most tax filers refunds of $600 to $1,200.

House Speaker Nancy Pelosi and Republican leader John Boehner scheduled a news conference for 1:30 p.m. EST to announce the $150 billion package, hammered out in a week of intense negotiations with Treasury Secretary Henry Paulson.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those couples with children an additional $300 per child under the deal. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates. The rebates would be limited to individuals whose income is $75,000 or less and working couples with incomes $150,000 or less. The plan would also boost the cap on Fannie Mae and Freddie Mac conforming loan limits.

Businesses would get more generous tax breaks for equipment investment, and small firms would get greater leeway to write off their expenses, under the agreement. Companies facing net operating losses this year would get to apply them to previous year’s tax bills to get a refund.

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01/22/08The package is likely to temporarily raise the conforming loan limits for Fannie Mae and Freddie Mac, beyond the current $417,000, which would allow the government-sponsored companies to buy bigger loans in areas with high housing costs. Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, said the new limit would be 125% of a metropolitan area’s median housing price, up to a cap of about $725,000.

Labor unions and advocates for the poor who have pressed for more generous unemployment insurance and food-stamp benefits in the package were disappointed those items have been dropped. “If we reject those in favor of business tax cuts, I’m not sure what the point is,” said Bill Samuel, legislative director of the AFL-CIO. “It seems like this whole process is being hijacked by business interests.”

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps rise higher for individuals and couples with children.

Sen. Max Baucus of Montana, who chairs the Senate tax committee, raised concerns about the lack of unemployment benefits in the deal. “I believe that is a mistake. And I hope that we can improve on that when we consider the bill here in the Senate,” Mr. Baucus said at a hearing Thursday morning. He said he would consider economic-stimulus legislation in his committee next week.

Democrats were eager to demonstrate an accomplishment on the top issue of this election year — the economy. Those who support the tentative agreement said they were successful in moving Republicans away from tax rebates geared toward higher-income people and made more than 20 million additional people eligible for rebates, compared to the Bush administration’s initial proposal. Bush administration officials had floated a plan to provide $800 rebates to all people who pay income taxes, with no limit on how wealthy they might be.

“I’m really proud we got a middle class tax cut,” said Rep. Rahm Emanuel of Illinois, the Democratic Caucus Chair. “It wasn’t what the Republicans wanted to do, and we made them do it.”

–The Associated Press contributed to this article