New political reality could shake up nation’s mortgage market

Big changes likely coming to banking regulations, interest rates

TRD MIAMI /
Nov.November 14, 2016 02:15 PM

From the New York website: 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 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
Daily Digest Miami

Missoni Baia lands massive loan, Babylon Brickell owner sells Overtown property: Daily digest

Donald and Melania Trump at the entrance way of Mar-a-Lago (Credit: Getty Images)

With move to Mar-a-Lago, Trump could use Florida real estate law to protect himself from creditors

Donald Trump at Trump National Doral (Credit: Getty Images)

Former members of Trump Doral may have to wait decades to get their deposits back

President Donald Trump (Credit: Getty Images, Mar-A-Lago Club)

Trump properties in Palm Beach County could get $1.5M tax bill

Dmitry Rybolovlev, Donald Trump, and 5252 North Country Road (Credit: Getty Images)

Russian oligarch sells last piece of former Trump estate in Palm Beach for $37M

President Trump and Mar-a-Lago (Credit: Getty Images)

Revenue fell at Trump’s Palm Beach properties in 2018

Donald Trump and Trump Doral (Credit: Getty Images)

Trump Doral’s financial results falter due to Trump name: report

Jorge Pérez on building golf courses in Cuba with Trump, stepping down as president and more

Jorge Pérez on building golf courses in Cuba with Trump, stepping down as president and more

arrow_forward_ios