Over a month into the Trump presidency, we are already seeing the impact the new administration is having on the housing industry. In fact, in a matter of hours after being inaugurated, President Trump issued an executive order that immediately suspended a fee reduction that was set to go into effect on FHA loans. This reduction would have cut the fees by .25 percentage points of the total amount borrowed.
Reactions to this new order have been mixed across the board with some advisors believing the suspension will take money away from low income homeowners while others believe the action will protect taxpayers if we were to experience another housing crash.
Regardless of who takes office, rate volatility has always been present at the start of a new administration, and the expectation is no different for Trump’s presidency. Uncertainty about the president’s plans for tax reform and financial regulations is the main cause of rate volatility at the beginning of a presidential term. As President Trump begins to make his financial regulatory plans clear, we will begin to see which way the ball rolls as far as mortgage rates go.
Barring a recession, home prices are expected to steadily rise, but as building and construction increases to keep up with demand from new homebuyers, prices will eventually plateau. We are already beginning to see price increases due to housing demand in response to the Trump administration’s push to reform the Dodd-Frank Act which would make it easier for homebuyers to borrow.
It’s important to keep in mind that although the president and his administration do have a major impact on the housing market, there are many other factors that have influence as well.