IMB conference: Bob Broeksmit considers election implications on mortgage rates, regulations

Whichever candidate — Kamala Harris or Donald Trump — wins the 2024 presidential election won’t have much impact on interest rates, but they will bring changes to the mortgage industry from a regulatory perspective, according to the report. Mortgage Bankers Association (MBA) president and CEO Bob Broeksmit.

“Nobody is serious about financial management,” Broeksmit said Tuesday at the time HousingWireIMB conference in Dallas. “Why does that matter? Deficit financing is full of debt, because if we’re going to run $1 trillion to $2 trillion of annual deficits, adding to the debt every year, that’s a lot of debt buyers can (use) to buy MBS. [mortgage-backed securities] because they will buy Treasurys,” said Broeksmit.

This trend, which Broeksmit does not see changing, will have an impact on the spread between the 10-year Treasury and the 30-year mortgage rate. Spreads are historically high, putting pressure on mortgage rates. The result? “We’re not going back to 4% mortgage rates” anytime soon, he said.

According to Broeksmit, the The Federal Reserve will continue to cut rates, with management expecting a 100 basis point drop this year and an estimated 100 bps more in 2025.

From a regulatory perspective, Broeksmit said “the 2024 election is very important” and it divides private mortgage banks into two groups.

“IMBs hate all the regulatory nonsense but invest in a good compliance program,” Harris’ office said, “it’s not the end of the world because Democrats love government-sponsored businesses with high volume.”

Meanwhile, IMBs worry about enforcement actions and can resist all regulations they believe the Trump administration is better off. But this time, GSE reform is “more likely to be on the table,” that is Fannie Mae again Freddie Mac can be reduced or at least returned to the private sector.

“I’m not telling anyone how to vote,” said Broeksmit. “I’m just saying that there are different results from different election results, and it’s very important to our industry in a way that maybe when things seem to be going wrong, it doesn’t matter.”

Political discussions

Regarding the 2024 presidential race, Broeksmit said, “Ignore the general election — it doesn’t matter at all. If there was a big difference, you can easily translate the difference in electoral college votes.”

According to him, due to the great momentum behind the Democratic National Convention, “it is possible that Vice President Harris will win the popular vote. The question is, how is it distributed and who wins the electoral vote?”

To an audience of housing experts, Broeksmit said the good news “is that people care about mortgages and mortgages, and it’s a bifurcated issue.”

Another part of positivity? “At least we’re not in the news because everyone is going to be axed, right? I mean, when we made all those loans that didn’t pay, it was considered our fault, and then, we should be held responsible,” he said.

“In this case, it’s macroeconomic factors that we are all working intelligently with all borrowers to try to resolve one by one, but we need some help from the government.”

Broeksmit said the biggest issue for the housing sector is on the supply side, so proposals to increase demand, such as providing down payment assistance, will not help.

“We’re not going to have a $25,000 down payment. I don’t care who wins this election; it will never get 60 votes in the Senate. … I also think it’s a misconception,” he said, adding that down payment programs already exist for home buyers.

Regarding the supply side, he said, “I don’t want the government to subsidize the builders with the things they will build anyway” But he also believes that it is a good idea to support affordable homes by eliminating red tape and government costs. and local government programs and federal tax benefits.

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