Hawai'i's slowing housing market could get a lift later this year by part of the national economic stimulus package signed by President Bush on Wednesday.

The stimulus package's main tool is tax rebates for consumers, but the law also temporarily will raise the maximum value of "conforming" mortgage loans that have lower interest rates than "jumbo" loans.

A higher conforming loan limit is expected to reduce mortgage payments on homes bought for well above the median price in Hawai'i — mostly homes priced from about $782,000 to $912,000.

The change also is expected to entice many existing homeowners to refinance jumbo mortgages over $625,500 and higher-interest second mortgages with lower-priced conforming loans, potentially reducing monthly payments and leaving them with more disposable income.

The National Association of Realtors forecasts that the conforming loan limit changes will result in as many as 438,000 additional purchases and 700,000 refinancings of homes nationwide. The trade association also said that in some cases, the additional refinancing activity would help some homeowners avoid foreclosure.

"These are real results and can have an immediate and sustainable impact for families across our country," Richard Gaylord, association president, said in a statement.

However, it's not clear to what extent home sales in Hawai'i might be affected, other than allowing buyers to buy a more expensive house or retain more disposable income with the monthly mortgage payment savings.

Chason Ishii, president of Coldwell Banker Pacific Properties, said more Hawai'i residents will be able to buy homes this year, largely because the higher conforming loan limits will give buyers more loan options following the elimination of many loan products lost in the meltdown of the subprime lending industry.

"It opens up again (more loan options) to an extent," he said. "I think that's the main thing that the consumer here will see."

Other observers say the new loan limits won't necessarily generate more home sales in Hawai'i, but may just shift the timing of sales to take advantage of the temporary conforming loan limit change.

Under the economic stimulus package, higher conforming loan limits will expire at the end of the year. But it's still unclear when changes will take effect.

Mary Trupo, spokeswoman for the National Association of Realtors, said higher conforming loans are expected to be available through the Federal Housing Administration within 30 days. But she said the main backer of conforming loans — government-sponsored enterprises Fannie Mae and Freddie Mac that purchase or guarantee conforming loans issued by private lenders — could take three months to implement the change.

Given the timetable, it may be that people planning to buy a home will delay a purchase until the new loan limits become active, while others may hurry a purchase later in the year to beat the sunset.

Stacie Whitfield, founder and principal broker of Monroe, Wash.-based real estate sales firm Flat Fee RE, said there are so many variables to a purchase, including someone's credit score and down payment size, that it's hard to say how much of a benefit Hawai'i's housing market will see.

"I think it will help," she said. "I don't think that it's going to have a huge impact."

Much of the benefit from higher conforming loan limits is expected to be felt in Mainland markets where the pending change will enable more home purchases by the middle class because median home prices and conforming loan limits are much lower.

Under the stimulus package, maximum loan amounts for conforming mortgages will rise to the lower of either $729,750 or 125 percent of the median single-family home price for an area.

In Hawai'i, the current maximum conforming loan amount is $625,500, which could finance a home purchase price of up to about $782,000, assuming a 20 percent down payment.

The increase to the maximum conforming loan amount of $729,750 could finance a home purchase price of about $912,000, assuming 20 percent down.

Tom Zimmerman, president of Central Pacific HomeLoans, said the typical interest rate difference between a conforming loan and a jumbo loan can be 0.125 to 0.75 of a percentage point, which represents savings.

For instance, on an $800,000 house with a $160,000 down payment, the monthly payment on a 30-year loan for $640,000 at 6 percent interest would be about $3,800, or $300 more a month than a loan at 5.25 percent.

Zimmerman said much of the stimulation will be in the refinance market, as the higher conforming loan limits encourage homeowners with mortgages near $625,000 to take on a second mortgage for home improvements, or to convert a jumbo loan into a lower-priced conforming loan or to consolidate existing higher-interest second mortgages into one loan with lower interest.

"It definitely should stimulate real estate activity," he said.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.