Mortgage Rate Issues to Keep an Eye on
With the presidential election behind us, many new homeowners are wondering how the President’s reelection will impact mortgage rates and the housing market in general. And while we can’t predict what Congress and the President will do, we can keep an eye on some areas of mortgage and real estate as we get through these next four years.
Whether Edward DeMarco will be kept on as head of the Federal Housing Finance Agency is still to be seen. He over sees Freddie Mac and Fannie Mae, and has been criticized in many democratic circles for his refusal to enforce many of the President’s policy proposals. DeMarco has been head of the Federal Housing Finance Agency since the former director stepped down in 2009. We probably won’t see much happen until the fiscal cliff has been put to rest, but if the President replaces DeMarco, he will probably have plans to pursue his housing agenda in this second term.
We can also watch the Federal Reserve. They recently took on a third round of ‘qualitative easing’ by buying large amounts of Treasury bonds to help free up credit. They have also committed to supporting low interest rates through 2015.
We can keep an eye on further assistance for underwater homeowners. No one is sure if the President will push for expanded refinance assistance, which will have to be approved of by congress, but he could turn the Home Affordable Refinance Program into a streamlined refinance program for Freddie Mac and Fannie Mae borrowers. This would allow any homeowner with a Freddie Mac or Fannie Mae mortgage to refinance, trouble free, if they are current on their payments.
One of the most critical issues we currently face is defining a qualified mortgage and how much down payment will be required. If the standard down payment was 20%, we would have many safe mortgages; however, that number cannot be obtained by many new homebuyers. So far, the President’s administration hasn’t shown any specific criteria for mortgage qualification, except that the borrower must be able to repay the mortgage.
The Consumer Financial Protection Bureau is expected to stay on its current course. However, the bureau makes it tougher for new mortgages to be obtained. They have strict guidelines that many of us are still getting used to.