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With a new Administration comes a new look at housing and homeownership. Homeownership rates have been on the decline since the housing crash of 2008. To get them back on track, it may be time for some changes.
The stigma associated with mortgage lenders is fading. Taxpayers and home buyers have much more confidence in mortgage lending and lenders. The challenge is now finding sufficient affordable housing for first-time homebuyers to enter the market. This will allow for more move-up buyers, and for the strengthening of homeownership rates and the housing market. The FHA rate cut was intended to help do so. But, as we know, that got rolled back by President Trump.
Some say good move, others say bad. Only time will tell. The concern is that with the FHA taking on a much larger share of home financing, quadrupling the share it held in 2007, and if defaults were to increase for any reason we could see another taxpayer bailout of the FHA Insurance Fund. That would not bode well for taxpayers, and it would once again put mortgage lenders in a poor light. Let’s not return to those days.
Maybe it is time for some change. After all, the crash is now almost a decade old and:
- Homeownership rates in many areas have hit bottom and are starting to rise,
- The rate for households of those 35 to 44 has increased YOY for 4 consecutive quarters,
- Homeownership rates for Hispanics is at a 3 year high, and
- Owners current equity position is at an all-time high.
Things do seem to be looking up for housing and homeownership. So, where do we go from here?
The current Administration is looking to roll back regulations that many believe have stymied lending. Mortgage giants Fannie and Freddie are easing their credit standards and expanding loan programs to assist first-time and low to moderate income homebuyers.
This all bodes well for housing and the homeownership rate, which is good for mortgage lenders. However, we need to keep our eyes on the prize: a strong, robust economy.
As things improve, and regulations, rules, and credit standards are eased, the potential excesses that troubled us in the past, will return. Troubles that had a devastating effect on housing, mortgage lending, and the economy. Those were not so thrilling days.
Any new housing policies, lending programs, and/or premium cuts must be done with an eye toward avoiding the problems and pitfalls that resulted in the excessive regulations and the tightening of credit standards.
Hopefully, we’ve learned from our mistakes so the future of housing and mortgage lending will be more stable and much brighter. With that, we will once again return to those days of improving homeownership rates.
Lend responsibly, my friends. Your future depends on it.
