Items tagged with mortgages:
News & Updates:
The House of Representatives voted on two bills, one aimed at easing regulations on many but the largest banks, the second allowing patients to bypass the FDA in requesting companies’ approval on experimental drugs. Mortgage applications are down this week due to sharp rate increases.
Faculty Affiliate Susan Wachter explains the ways in which non-bank lenders such as Quicken Loans have helped keep both the real estate market alive and mortgage rates low. Compared to banks, lenders such as Quicken are more lightly regulated, and their credit scoring models haven’t really been tested yet. Wachter, therefore, cautions “if there is a crisis, non-banks don’t have the financial backing, they don’t have the capital. There won’t be the same source to pay up the penalties and fines the next time around, if there is a next time around.”
The Federal Reserve lifted the federal funds rate on Wednesday by a quarter percentage point to a range of 1.5 percent to 1.75 percent.
Faculty Affiliate Susan Wachter comments on how this rate hike affects mortgages. ““I do see a 5 percent and even a 6 percent rate coming, a year or two out,” she says. “And that, amazingly enough, takes us back to normal. We’ve been living in a world where mortgage rates have been incredibly low.”
House passes another stopgap funding bill; Senate committee advances President Trumps EPA Deputy Nominee; Higher interest rates stall mortgage applications.
The tax bill released by Republicans on Thursday proposed capping the mortgage-interest deduction, limiting the portion of a mortgage on which people can deduct their interest at $500,000, down from the current level of $1 million.
Though Faculty Affiliate Todd Sinai says that the deduction doesn’t appear to encourage homeownership however, which it was ostensibly designed to do.