(Bloomberg) -- The federal government plans to back mortgages of more than $1 million, catching up with the dramatic rise in US home prices in recent years. 

The 2023 limit for mortgages on single-family homes in high-cost areas, such as parts of New York and California, will be $1.089 million, the Federal Housing Finance Agency said in a statement Tuesday. That threshold, for loans to be acquired by Fannie Mae and Freddie Mac, is up from the 2022 limit of $970,800.

For most of the US, the limit on Fannie and Freddie-backed loans will be $726,200, up from $647,200 this year.

The pandemic boom pushed house prices higher across the US as buyers competed for properties. While the market has started to cool, prices in September were still up from a year earlier, the S&P CoreLogic Case-Shiller index showed Tuesday.  

Fannie and Freddie don’t make mortgages. They buy them from lenders, wrap them into securities and guarantee repayment of principal and interest to investors. The federal government took control of the companies during the 2008 financial crisis and bailed them out as mortgage defaults mounted.

(Adds detail on type of properties in second paragraph.)

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