New political reality could shake up nation’s mortgage market

Big changes likely coming to banking regulations, interest rates

TRD New York /
Nov.November 14, 2016 01:42 PM

Potential changes to banking regulations and rising interest rates under a Trump presidency could upend the mortgage market in the United States.

The course of the housing recovery, the availability of credit to borrowers and the amount of risk that lenders are willing to take on could all be affected by any changes to regulations and interest rates, the Wall Street Journal reported. The structure of the mortgage market — in which banks currently favor standard and jumbo loans, but nontraditional lenders offer riskier debt — could also be affected.

While Trump TRData LogoTINY does not officially become commander-in-chief until Jan. 20, markets have already reacted to his upcoming presidency. Bond yields and mortgage rates have risen rapidly since the election. In the two days following Trump’s victory, the average rate on a 30-year fixed-rate conforming mortgage rose a quarter of a percentage point to 3.87 percent, according to the paper. Lenders are now worried that mortgages may become more expensive sooner than was expected.

“The ultimate problem is the impact of rising rates on home values,” Stu Feldstein, the president at mortgage-research firm SMR Research Corporation, told the Journal. “We’re back into a bubble condition in part because of low rates that have enabled people to buy houses much more expensive than their incomes could afford.”

Lenders are also watching closely to see if more “bank-friendly” regulations lie ahead. On Friday, Trump pledged to dismantle or greatly reduce the 2010 Dodd-Frank financial reform law. According to the New York Times, Trump has surrounded himself with advisors that are critical of the Federal Reserve, and support reining the central bank’s power and influence. [WSJ]Miriam Hall


Related Articles

arrow_forward_ios
Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory

Make Greenland Great Again? Trump wants to buy Arctic territory
Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month

Hamptons’ priciest summer rental to host MAGA extravaganza next month
Dan GIlbert (Getty, iStock)

Mortgage mogul Dan Gilbert sees net worth quicken to $34B

Mortgage mogul Dan Gilbert sees net worth quicken to $34B
President Donald Trump and Blackstone CEO Stephen Schwarzman (Trump by Scott Olson/Getty Images; Schwarzman by David Fitzgerald/Sportsfile for Web Summit via Getty Images)

Blackstone boss leads Wall Street charge for Trump

Blackstone boss leads Wall Street charge for Trump
The rate on the 30-year mortgage fell to 2.88 percent, the lowest rate in 50 years (iStock)

30-year mortgage rate hits record low — again

30-year mortgage rate hits record low — again
Deutsche Bank CEO Christian Sewing and President Donald Trump (Sewing by Thomas Lohnes/Getty Images; Trump by Drew Angerer/Getty Images)

Deutsche Bank probed in Manhattan DA’s Trump Org investigation

Deutsche Bank probed in Manhattan DA’s Trump Org investigation
The weekly survey tracking purchase loans saw a seasonally adjusted decline of 2 percent in the final week of July. (iStock)

Home loan applications fall again amid tight credit rules, weak job market

Home loan applications fall again amid tight credit rules, weak job market
President Donald Trump and Manhattan District Attorney Cyrus Vance (Trump by BRENDAN SMIALOWSKI/AFP via Getty Image; Vance by Kevin Hagen/Getty Images)

Trump Org may be focus of broader fraud investigation by Manhattan DA

Trump Org may be focus of broader fraud investigation by Manhattan DA
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...