Quantitative Easing's End Looms on the Horizon
What’s ahead? The steady but admittedly slow recovery of the economy has led the fed’s to continue with the planned tapering of the bond program to wrap up by October. With the conclusion of quantitative easing on the horizon, eyebrow lifts over the potential of rising interest rates are occurring among buyers and sellers.
Wait It Gets Better....
Consumers, particularly millennials have had their collective ears to the ground for a few years on the rising interest rate front. The possibility of the fed’s beginning to sell back their bond holdings could boost the supply of bonds, resulting in higher rates. The unpredictability of interest rates has resulted in drastic differences sometimes by double digits, depending on which generation you happen to be part of. That’s the good news, in reviewing history; it’s very unlikely we’ll wake up to 13% next week.
Fannie & Freddie To Close Up Shop
HUD President Julian Castro (hushed whispers also have him dubbed as a potential running mate for Hillary in 2016) was quoted this week, “The truth is that the dream of homeownership is out of reach for too many Americans.” His plan to work with Lenders to ease both the tight lending restrictions as well as the “national rental housing crisis” is seen as a bold move by both parties. A return to subprime lending is one prospective solution, which has consumers and lawmakers both biting their nails.
Castro’s push for reform, suggesting the need of more private capital within the mortgage industry, seems to support the stalled Johnson-Crapo bill. The bipartisan bill proposed to end Fannie and Freddie entirely and direct funds to affordable housing programs lacked enough support to garner a floor vote in the Senate. The future of Fannie and Freddie is divided, there are murmurs that Fannie could be considering a move to trade on the NYSE, as reported by a recent job posting.
Some (myself included) were fully unaware that while Fannie & Freddie received a bailout in 2008, both entities are now operating in the black. With $188 billion borrowed and $218.7 billion returned, the days of taxpayer support are left in the dust. Profits are now sent to the U.S. Treasury Department on a quarterly basis.
Fannie Mae’s famed HomePath Program ends next month, while Freddie’s HomeSteps program will continue in select states, AZ, FL, GA, KY, NC, SC, TN, TX, & VA.
Most Americans, lawmakers and congressional leaders are all in agreement on one front. Housing in the U.S. needs to become more attainable for all, the last piece of the economic puzzle remains in the balance. The path to reform is, as always, up for debate. Oh the benefits of Democracy! I encourage you ALL to stay tuned and have a voice with the changes that are sure to take place over the next two years to our housing market.