With any new presidency, there are a number of things that change. Recently, the Trump administration reversed a cut in the Federal Housing Administration that had been implemented by former President Obama. This cut had been intended to decrease monthly payments for thousands of borrowers, which would potentially have helped boost the American economy.
Staying apprised of events like this is important when you intend to take out a mortgage. The news from Jan. 16 reports that the total number of FHA applications have been low, at 13 percent fewer than normal. Many people who had applied pulled out their applications.
Mortgage rates have also increased in 2017. The average contract interest rate for a fixed, 30-year mortgage has been at its highest level since December last year. It's now at 4.39 percent over the lifetime of the mortgage. Mortgage rates had previously jumped following the presidential election, falling for a short time before increasing once again.
What does that mean for someone like you? If you want to take out a mortgage, you may end up paying more over the loan's term than you would have with the same loan several months ago. Home prices are continuing to improve across the country, but the ability for people to afford them is weakening. The demand for housing is rising, so home sales could grow, but that could potentially pose issues if people are buying what they can't afford. If that happens, foreclosures, short sales and other debt settlements could begin to increase.
Source: CNBC, "Trump's first housing move tanks mortgage applications 3.2%," Diana Olick, Feb. 01, 2017