Whichever candidate – Kamala Harris or Donald Trump – wins the 2024 presidential election will not have a significant impact on the interest rate path, but they will bring changes to the mortgage industry from a regulatory perspective. Association of Mortgage Bankers (MBA) President and CEO Bob Broeksmit.
“Neither candidate is serious about budget discipline,” Broeksmit said on Tuesday HousingWire‘s IMB Summit in Dallas. “Why does that matter? Financing the deficit will crowd out mortgage debt, because if we’re going to run annual deficits of $1 trillion to $2 trillion, increasing debt every year, then there’s a lot of debt that buyers can’t (use) to buy MBS. [mortgage-backed securities] because they are going to buy government bonds,” Broeksmit said.
This trend, which Broeksmit does not see changing, will help maintain the difference between the 10-year government bond and the 30-year mortgage rate. The spread is historically high, putting pressure on home loan rates. The result? “We’re not going back to a 4% mortgage rate any time soon,” he said.
According to Broeksmit, the Federal Reserve will continue to cut rates, with the executive expecting a decline of 100 basis points this year and about 100 basis points more in 2025.
From a regulatory perspective, Broeksmit said the 2024 elections “matter a lot” and divide independent mortgage banks into two groups.
For “IMBs who hate all the regulatory nonsense but have invested in a good compliance program,” a Harris presidency “is not the end of the world, because Democrats heavily favor high-volume, government-sponsored enterprises.”
Meanwhile, IMBs who worry about enforcement actions and can’t handle all the regulations think the Trump administration is better. But in this case, GSE reform “would most certainly be on the table,” whatever that means Fannie Mae And Freddie Mac could shrink or at least be returned to the private sector.
“I don’t tell anyone how to vote,” Broeksmit said. “I’m just saying that there are different outcomes from different election results, and it matters a lot to our industry in a way that it might not matter if things were a little less polarized.”
Political musings
Regarding the 2024 presidential race, Broeksmit said: “Don’t pay any attention to the national polls – they don’t matter at all. If there were a huge difference, you could easily translate the difference into votes in the Electoral College.”
According to him, because of the tremendous momentum following the Democratic National Convention, “it is very likely that Vice President Harris will win the popular vote. The question simply becomes: how will it be divided and who will win the electoral vote?
Before an audience of mortgage professionals, Broeksmit said the good news is “people care about housing and housing financing, and it’s a bipartisan issue.”
Another bit of positivity? “At least we’re not in the news because everyone’s going bankrupt, right? “I mean, when we took out all those loans that didn’t pay out, it was considered our fault, and of course we deserve our share of the blame,” he said.
“This time it is the macroeconomic factors that we are all trying to solve in a creative way with all our borrowers, but we need help from the government.”
Broeksmit said the main problem for the housing sector is on the supply side, so proposals to increase demand, such as offering down payment support, will not help.
“We’re not getting any help with the $25,000 down payment. I don’t care who wins this election; it will never get 60 votes in the Senate. …I think it’s a dumb idea too,” he said, adding that down payment programs already exist for homebuyers.
Regarding the supply side, he said, “I don’t want the government to subsidize builders for stuff they’re going to build anyway.” But he also believes it’s a good idea to support more affordable housing by eliminating red tape and costs through the state. and local government initiatives and federal tax incentives.
