President Joe Biden used some of his State of the Union address to tackle one of the most pressing economic concerns for consumers: housing costs.
"I know the cost of housing is so important to you. If inflation keeps coming down, mortgage rates will come down as well. And the Fed acknowledges that. But I’m not waiting," Biden said. "I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down, to put toward their mortgage when they buy a first home or trade up for a little more space. That’s for two years."
The proposals Biden pitched would provide middle-class, first-time buyers with $5,000 per year for two years. That would have the same effect as lowering a buyer’s mortgage rate by more than 1.5 percentage points for two years on the median home, according to the White House.
Biden will also call on Congress to provide a one-year credit of up to $10,000 for families who sell their starter homes, so long as their houses are below the median price in their county. The idea is to free up a part of the market that has been effectively frozen, as thousands of homeowners cling to low mortgages of 2% or 3% to avoid buying a new home with a much higher rate.
Another initiative outlined by Biden is the expansion of federal housing assistance programs to provide greater support to low- and middle-income families. This includes increasing funding for programs such as Section 8 vouchers and the Low-Income Housing Tax Credit, which help individuals and families afford safe and stable housing.
Biden also highlighted the importance of investing in the construction of new affordable housing units. He proposed allocating federal funds to support the development of affordable housing projects in communities across the country, with a focus on areas experiencing the most acute housing shortages.
In addition to addressing housing affordability, Biden stressed the need to address issues of housing discrimination and segregation. He emphasized the importance of fair housing laws and pledged to take action to combat discrimination in the housing market.
Biden underscored the importance of addressing the impact of climate change on housing stability. He proposed initiatives to promote sustainable and resilient housing development, including investments in energy-efficient housing and measures to protect communities from the impacts of extreme weather events.
"MBA welcomes the Administration’s focus on legislative reforms and regulatory fixes that increase single-family and multifamily housing supply and help to make homeownership more affordable and attainable for all qualified borrowers," Mortgage Bankers Association CEO Bob Broeksmit said. "This is even more important in today’s high mortgage rate environment."
He acknowledged that housing markets continue to suffer from supply-demand imbalances.
“We have urged the Administration to take meaningful action to remove regulatory barriers that impede development. We also have offered recommendations that would make government lending programs less costly and more effective for our members and consumers," Broeksmit said.
However, he questioned whether eliminating title insurance for refinances of GSE loans was the right move.
“MBA has significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition," Broeksmit said. "In 2015, the industry implemented final rules from the Consumer Financial Protection Bureau making comprehensive reforms to mortgage disclosures to increase clarity and transparency and to help facilitate consumer shopping. In 2020, the CFPB reviewed and praised its own rules. Suggestions that another revamp of these rules is needed depart from the legal regime created by Congress in the Dodd-Frank Act and will only increase regulatory costs and make it untenable for smaller lenders to compete."
