Having made history, former Republican president Donald Trump was elected as the 47th president of the United States, defeating vice president Kamala Harris. This change is expected to have a broad impact on American homes.
Republicans look poised to make significant gains in Congress. Control over The Senate it was also decided in the party’s favor, with 52 seats, compared to the Democrats’ 42 on Wednesday morning. Of House of RepresentativesRepublicans lead with 198 seats, compared to 180 for Democrats.
This points to a “red wave” that could set the American political scene from January. “This is going to be America’s greatest moment,” Trump told supporters at his campaign headquarters in West Palm Beach, Florida, on Wednesday morning.
Trump will succeed President Biden, whose administration has struggled with border challenges, high inflation and rising tensions in the Middle East. In the mortgage space, high interest rates and rising housing prices have pushed affordability to historic lows, and the industry has often raged against the administration’s regulatory zeal.
Trump’s victory has had an impact on the mortgage industry – albeit indirectly. The high probability of a Trump administration, with expectations of higher government spending, pushed up the 10-year Treasury yield, which reached 4.475% on Wednesday morning. Mortgage rates are expected to follow. On Tuesday, the 30-year mortgage rate was at 6.88% although it is rising quickly. Mortgage News Daily had rates of 7.04% Wednesday morning.
“In the short term, prices go up!” said HousingWire lead analyst Logan Mohtashami. “I doubt we’re going to get a big deficit and a big drop in inflation from that and the tax. However, until there is more policy clarity, the 10-year yield will be in line with economic data, which has been beating estimates for the past two months. “
Mohtashami said that while mortgage rates of 8% are unlikely this year because spreads have widened, if it gets worse “and we hit 5% on the 10-year yield, 8% is in play.”
In response to the election results, i Community Home Lenders of America (CHLA), which represents small and medium-sized private community banks, said it “looks forward to working with President Trump, Vice President Vance, and the rest of the administration on the important goal of building affordable and affordable housing for borrowers – especially those who are first-time and low- to moderate-income.”
The trade group’s 2024 policy priorities include lowering costs for third-party service providers, such as FICO credit score fees, and eliminating default leads; and proposing a comprehensive and effective GSE reform.
Trump’s housing agenda
Trump’s overall housing agenda remains a mystery. Although his 2017 tax cuts are likely to be renewed, Trump has made no mention of housing during his campaign and has often tied questions of housing to immigration, saying that immigration has made housing more expensive in America. Trump and his allies have argued that the influx of undocumented immigrants is driving up demand and driving up housing prices, ultimately making home ownership more of a challenge for citizens.
“The 25 million foreigners competing with Americans for scarce housing is one of the factors driving the country’s housing prices,” said Sen. JD Vance (R-OH) in an interview in early October.
However, if Trump follows through on his threat of mass deportations, it could reduce the number of construction workers and slow homebuilding. That could conflict with expected plans to incentivize homebuilders with low-income housing tax credits.
An important thing to watch will be any changes that focus on government-sponsored businesses. Former Trump White House staffers have come out and said the president-elect intends to remove them Fannie Mae again Freddie Mac from the Conservatory.
Ex-Federal Housing Finance Administration Director Mark Calabria said it will be several years before Republicans return companies to the private sector. He put the chances of it happening in 2027.
However, plans are already in the development stage. Larry Kudlow, former director of The National Economic Councilhe is said to be a senior adviser on the trip, along with John McEntee, former director of the White House presidential office.
One part of the proposed plans includes “making the Treasury Department repay a portion of Fannie and Freddie’s loans through so-called standby guarantees,” The Wall Street Journal reported in September, citing an anonymous source. “[This is] similar to how the Federal Deposit Insurance Corp. (FDIC) by which it returns deposits below a certain limit to banks.”
As for approaches to private businesses, one approach that has been discussed is to bypass both houses of Congress and instead start the process through the FHFA. The agency will be “key to any plan,” the report said, as it establishes requirements for the head of the GSEs.
Any additional value generated by the GSEs could be split between the government and GSE shareholders, potentially avoiding lengthy and expensive legal proceedings.
If they are released from the Conservatory, there are big questions about the response from the MBS markets, what happens to the previous securities issued by the GSE and the weight of the future risk.
Opponents say the Fannie and Freddie exemptions would limit the credit box and result in higher insurance costs.
Regulation and enforcement under Trump
It is not yet clear who Trump’s transition team will tap to run key housing agencies and regulatory bodies, such as the FHFA. The HUD again Consumer Financial Protection Bureau. Because of his earlier term in office and the expected majority in the Senate, there will likely be fewer acting directors than during his first administration, and Washington gridlock to delay the housing agenda.
Many potential officials have been vetted, and several key housing officials from 2016-2020 are rumored to be seeking jobs in the new administration.
Trump also campaigned heavily on tariffs to eliminate competition from foreign goods. Analysis from National Retail Federation they have said that such tactics can cost Americans 78 billion dollars a year. It has seen a return to the rising prices of lumber and real estate that were common after the pandemic.
Trump’s partner Elon Musk also recently promised to identify $2 billion in cuts to the US government budget, and that could affect housing agencies, which have seen budget cuts during Republican administrations.
Still, there is speculation that Trump’s second administration will be more friendly to the mortgage and real estate industries than Biden’s. House Speaker Mike Johnson has said that Republicans intend to repeal a large number of laws passed during the Biden years. I Mortgage Bankers Association he also said there is hope for less red tape and fewer regulatory costs under Trump over the next four years.
Analysts at Keefe, Bruyette and Woods (KBW) considered Trump’s win “a positive endorsement for the financial sector.” They added, “The election could have a major impact on the regulation of the financial sector, as the Trump administration may authorize withdrawals.”
Analysts say as many as eight regulatory agencies could face leadership changes in one day, including the FHFA and the CFPB.
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