Although the balance of power shifted in the nation’s capital this week, the mortgage and real estate industries remain on a fairly steady course. Some changes are almost certainly on the way, but they won’t happen overnight. Even so, here’s what we covered this week.
1. Hope and change for the mortgage giants
Calls to reform Fannie Mae and Freddie Mac have been ongoing for years. Together, the two companies bundle and securitize more than half of the country’s mortgages, and their status as “government-sponsored enterprises” has long been under the microscope. The latest proposal is to turn them into regulated monopolies like local utilities, but it’s unclear how much traction there is behind that idea for now.
2. Biden’s housing policy takes root
President Biden has made big promises when it comes to housing policy, and early signs of movement in that area are already showing. Almost immediately after taking office, the new president directed federal agencies to extend forbearance protection and a foreclosure moratorium for homeowners affected by the coronavirus pandemic. Here’s what else homeowners should expect from the new administration.
3. What rising Treasury rates mean for mortgages
Returns on the 10-year Treasury topped 1 percent for the first time since the pandemic began, and that could signal the start of rising mortgage rates. Although the two are not officially or directly linked, mortgage rates tend to follow the general pattern of the 10-year, and experts have long predicted the trend of historically-low rates would start to reverse sometime this year.
4. Foreclosures fell in 2020, but there’s a catch
Despite a major recession last year, home foreclosures were way down. But, that doesn’t mean homeowners avoided the worst of the downturn. Foreclosures stopped because lenders mostly weren’t taking back properties, even when their owners were delinquent on the mortgage. A strong real estate market and forbearance protections may have kept some owners out of foreclosure, too.
5. A downside of refinancing
Refinancing your mortgage can save you lots of money over time in interest, and money in the short term by lowering your monthly payments. It can also help you fund expensive projects like a home renovation if you cash out on some of your equity. But there is a downside to refinancing beyond the paperwork and stress: it can lower your credit, which could make it more difficult for you to take out other kinds of loans if you need them.