DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1537265
21 July 2025 July 2025 ยป themortgagepoint.com C O V E R S T O R Y We don't expect that to have a big impact on longer-term mortgage rates or 10-year Treasuries. Last year and so far, this year, 30-year mortgage rates moved from the low 6% range, then jumped in anticipation of the new administration. Then you had the Liber- ation Day impact, which led to turmoil in the financial markets, so the spread between mortgaged rates and Treasur- ies widened from 2.2 to 2.5 percentage points. It's come in a bit since then. We expect that it will continue to tighten a bit throughout 2025. The 30-year mortgage rate is at about 6.8% today. We think we'll be closer to 6.5% by the end of this year. Legislation & Regulations Fratantoni: Several provisions within the tax bill that passed the House and now is before the Senate could have an impact on real estate markets. The overall rate of taxation or any specific provisions could impact demand for real estate or the cost of financing real estate. Also, any potential changes to the status of Fannie Mae and Freddie Mac could impact liquidity in the secondary market, and ultimately, the cost of mortgage financing. There could be deregulation in the banking sector. There could be a new head of supervision and regulation of the Federal Reserve. Michelle Bowman was just confirmed as Vice Chair. She's likely to take overall bank regulation in a more business-friendly direction. That could have both broader economic benefits and specific benefits for the mortgage market. If we make some needed changes to bank regulation, we could see at least some big banks, which had been backing away from the mort- gage markets, become more active. FHFA, CFPB, HUD, FHA, and the VA all have active home loan programs. There are disagreements about where the policies and regulations are. Our members would like a consistent op- erating framework. Also, these agen- cies need to be staffed sufficiently to conduct their operations and make loan approvals. The Housing Market: Location, Location, Location Fratantoni: We are seeing some pretty distinct differences in state and regional housing markets. The weaker markets right now are in Florida and Texas, and other areas along the Gulf Coast. Den- ver, Colorado, and Austin are also seeing some price declines. We've seen a lot of new construction over the past couple of years, and now there has been a bit of a pullback. It just seems like we're at a point right now where supply was just running ahead of demand, and so now we're seeing prices adjust, and you're seeing homes linger on the market longer now. But the medium- to long-term fundamentals are quite strong. These are areas of the country that tend to be the beneficiaries of domestic migra- tion. People move out of higher-cost, higher-tax states into the Southeast and Southwest. There are many amenities in these areas as well. The other aspect of these South and West states and regions is that it's just easier to build. It's quicker to get new construction approved. There's more undeveloped land, so there are economies of scale in the construction process. They can put up more units more quickly. The flip side of that would be the Northeast, where the market is strong; inventory still remains pretty constrained, and you're seeing ongo- ing home price growth. That is also happening in a number of Midwest markets, though it's not as strong as the Northeast. These are areas where you're seeing sort of net migration out of some of these markets, particularly the high- er-cost ones, like New York. But because it's so difficult to put new units up, either single-family or multi-family in some of these older, more developed cities and area bounded by Interstate 610, which bounds the inner part of Houston. That led to an explosion of small-lot housing. Tens of thousands of homes were built, which helps explain why Houston has such a low homelessness rate. Then, they expanded that to the entire city around 2013 or 2014. Austin adopted a similar ordinance about three years ago. This month, the Texas House and Senate and the governor signed a bill that applies to new residential subdivisions of five acres or more in counties with 300,000 people or more but applies only to the cities within those counties with 150,000 people or more. In those cities, in those counties that are subdividing five acres or more, you can set the minimum lot size to no less than 3,000 square feet, and there's a bunch of other provisions that have to do with floor-area ratio and side lots and parking, all of which is good in terms of light-touch density. Do this broadly across the nation and we would get over 5 million additional homes over 10 years on the same amount of land. If you were to have light-touch density in existing single- family residential neighborhoods where it's economically viable to tear down what's there and build homes on smaller lots, you'd add another four or five million homes. Then have your Bureau of Land Management land, which could account for another 2 million. Then we have what we call livable urban villages, which just add an overlay of residential on top of existing commercial/industrial/retail areas. You're not required to build housing; just make it legal. That's another 4 million or 5 million. You add all that up and you're at 17 million homes added over 10 years. That's huge.