Trump’s Mortgage Cut Reversal Reduces Mortgage Applications

Mortgage ApplicationsData from the Mortgage Bankers Association (MBA) showed that the number of overall mortgage applications dropped primarily because of President Donald Trump’s reversal of a mortgage fee cut.

The White House almost instantly reversed the previous administration’s lower rate for the Federal Housing Administration’s (FHA) annual mortgage insurance premium, just a few hours after Trump was sworn into office on Jan. 20.

Uncertain Times

The MBA statistics revealed that the drop in applications for FHA loans contributed to a 3.2% decline in total mortgage applications on a seasonally adjusted basis in the last week of January versus the previous week.

As for affordable housing, Trump’s promise of reducing the corporate income tax has placed some housing projects in an uncertain position, as it could mean less funding for these plans. Unlike turn-key real estate investing with Americas Housing, Alliance LLC, a portion of tax credits granted to investors are used to fund affordable housing programs.

Despite a potential reduction in corporate income taxes not directly affecting the sector, it still raised concerns on how these projects will find other funding sources.

Devalued Credits

Trump’s proposed tax reform has led to the value of tax credits under the Low-Income Housing Tax Credit program to fall roughly 20%. The program sets aside an annual budget of up to $8 billion for affordable housing projects across the U.S. beginning in 1987.

Since then, the program has been instrumental in the development of more than 43,000 residential projects. Further development could be affected if Trump decides to cut the corporate tax rate to 15% or 20% from 35%.

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The new administration still has not come up with a clear platform for its regulatory policies on U.S. housing, that’s why you should be more careful in handling your property investments. It is best to consult with a real estate investment company first if you are unsure of how to move forward amid uncertainty over the impact of Trump’s regulatory policy-making decisions.

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