Now that the 2020 election has seemingly come to a close, many Americans are anticipating what the housing and mortgage industry may look like with Biden as president. Throughout his presidential campaign, Biden pledged to make some changes so that Americans will have “access to housing that is affordable, stable, safe and healthy, accessible, energy efficient and resilient,” according to his campaign website. In a Housing Wire article reporters James Kleinmann and Tim Glaze detail some of the possible changes that may be proposed by Biden.
To begin, Biden is looking to introduce a tax credit of close to $15,000 for first time home buyers. The purpose of the tax credit would be to help first time home buyers, specifically younger Americans as well as Black and Hispanic Americans. Although, according to the article, “Industry observers … weren’t optimistic that Biden would have the legislative muscle to get the full initiative through, unless Democrats also take the Senate.”
Biden also promised to put more regulation in place for agencies such as Consumer Financial Protection Bureau, where it is anticipated he will select a new leader of the agency. Its expected he would also look to continue the conservatorship of GSEs. According to Tim Rood, head of government & industry relations for Situs AMC, “If Biden wins, he is going to look to use Fannie and Freddie as instruments of public policy to help close the homeownership gap, the wealth gap, cap people’s payments on both rental and occupied housing, support the construction of 1.5 million to 2 million affordable housing units.”
Nevertheless, the results of the 2020 general election seem to point toward a split government, with a Republic-led Senate and Biden, a Democrat, as President. This balance is predicted to work in favor of the mortgage and real estate industry. The Republican led Senate may be able to push back on some of the tax policies, which could impact the investment and cost of owning a home, Biden has promised to introduce.
The undisputed belief among industry experts is that rates will continue to remain at the historically low rates for the next few years as the economy continues to stabilize.
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Photo Credit: Jon Tyson
2020 has been good to the home mortgage industry so far. According to an article published last week by CNBC.com, “Total mortgage application volume surged 30.2% last week from the previous week”. Mortgage companies not only saw an influx of refinance applications, but also an unseasonably high number of home purchase applications.
Interest rates dropped to the lowest level since fall of 2019 and, as a result, refinance applications surged. In fact, according to the article written by Diana Olick, “Those applications jumped 43% for the week and were 109% higher than a year ago. The refinance share of mortgage activity increased to 62.9% of total applications from 58.9% the previous week.”
However, home purchase applications pulled in some impressive numbers, especially considering the housing market typically doesn’t pick up until February. The volume of home purchase applications came in at the highest tally since October of 2009.
Unfortunately, this high demand for homes is met with a very low supply of homes. With a continued supply and demand mismatch, prices could soar and leave some prospective home buyers priced out of the market.
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Photo Credit: Gerd Altmann