New political reality could shake up nation’s mortgage market

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
Eric and Lara Trump with 502 Bald Eagle Drive in Jupiter (Getty, Google Maps)
Trump town: Eric and Lara buy home near Don Jr. in Jupiter
Trump town: Eric and Lara buy home near Don Jr. in Jupiter
Fontainebleau Miami Beach, Jeffrey Soffer and former President Donald Trump (Ebyabe/Wikipedia, Getty, iStock)
Gambling portability a no-go in Florida this year for Jeffrey Soffer, Trump
Gambling portability a no-go in Florida this year for Jeffrey Soffer, Trump
Gil Dezer (Photos by Sonya Revell)
The Closing: Gil Dezer
The Closing: Gil Dezer
Brad Parscale and 2319 Desota Drive (Getty, Google Maps)
Brad Parscale, ex-Trump campaign manager, sells Fort Lauderdale home
Brad Parscale, ex-Trump campaign manager, sells Fort Lauderdale home
Donald Trump with sons Eric and Don Jr. and 1125 South Ocean Boulevard (Getty, Google Maps/Illustration by Alexis Manrodt for The Real Deal)
Trump lists beachfront mansion next to Mar-a-Lago for $49M
Trump lists beachfront mansion next to Mar-a-Lago for $49M
Photo illustration of Donald Trump at Mar-a-Lago (iStock, Getty/Illustration by Kevin Rebong for TRD)
Trump argues to live in Mar-a-Lago — as an employee
Trump argues to live in Mar-a-Lago — as an employee
535 North County Road and Mark Pulte with former President Donald Trump (Google Maps; Pulte Family Foundation; Getty)
Spec home built on Trump’s former Palm Beach property under contract for $140M
Spec home built on Trump’s former Palm Beach property under contract for $140M
Trump Plaza’s condo board votes to remove ex-president’s name from West Palm towers
Trump Plaza’s condo board votes to remove ex-president’s name from West Palm towers
Trump Plaza’s condo board votes to remove ex-president’s name from West Palm towers
arrow_forward_ios

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

Loading...