January 5, 2016

In Case You Missed It: A Look at Recent National Housing Policy News

Here are Freddie Mac's five housing predictions for 2016
Prognostications on interest rates, house prices and more
Freddie Mac is looking towards 2016 and trying to predict just what’s going to happen in housing over the next 12 months.  Freddie Mac is already on the record stating that it doesn’t think mortgage interest rate will increase immensely in 2016, despite the Federal Open Market Committee recent announcement that it is raising the federal funds rate for the first time since June 2006.  In the wake of that announcement, Freddie Mac’s chief economist, Sean Becketti, said that interest rates should remain at “historically low levels” throughout 2016, in spite of whatever moves the Federal Reserve is expected to make.
Here are five more housing predictions for 2016, courtesy of Freddie Mac:

  • Expect the 30-year fixed-rate mortgage to average below 4.5% for 2016 on an annualized basis
  • Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015's home sales momentum into 2016
  • Expect house price growth to moderate a bit to 4.4% in 2016 driven in part by the reduction in homebuyer affordability and reduced demand as a result of Fed tightening
  • Housing activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16% year-over-year and total home sales to increase 3%
  • While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015

GSE Reform Talks 'Reignited' with Key Budget Provision: Corker

"Jumpstart was very important to make it clear that the responsibility is going to lie with Congress" to enact housing finance reform, Sen. Bob Corker told American Banker on Wednesday.
In the controversial budget deal lawmakers unveiled earlier this week there's one bright spot for advocates of housing finance reform.  The spending package included a key provision from a bipartisan bill that would prohibit the Treasury Department from selling its stake in Fannie Mae or Freddie Mac until at least Jan 1., 2018. The Jumpstart GSE Reform Act, co-authored by Sen. Bob Corker, R-Tenn., ensures that Congress will lead any efforts to unwind the government-sponsored enterprises over the next two years.  It also includes a "sense of Congress" that lawmakers should determine the future of Fannie and Freddie and that Treasury should not sell or otherwise get rid of its preferred shares in the housing giants until after that time.

FHFA Issues Proposed Rule on Fannie Mae and Freddie Mac Duty to Serve Underserved Markets  

The Federal Housing Finance Agency (FHFA) is seeking comments on a proposed rule to implement the Duty to Serve provisions of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008.  This statute requires Fannie Mae and Freddie Mac (the Enterprises) to serve three specified underserved markets:  manufactured housing, affordable housing preservation and rural markets.  The proposed rule would require the Enterprises to adopt plans to improve the distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low-, and moderate-income families in the three specified underserved markets.

Affirmatively Furthering Fair Housing

We all want the same basic things for our families: a safe, affordable place to call home, a quality education for our kids, and access to transportation, jobs, retail and services. But the reality is that not everyone has equal access to those things. Despite genuine progress and transformation in the 47 years since the Fair Housing Act was enacted, the zip code in which a child grows up remains a strong predictor of that child’s success.  The Civil Rights Act of 1968 obligates the federal government and certain recipients of federal funds to affirmatively further fair housing (AFFH) as a means of ensuring equal access to opportunities for all people. The AFFH Rule was published to equip communities with the data and tools they need to meet the obligation and address significant disparities in housing needs and in access to opportunity.

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