The housing market may dampen somewhat as a result of cuts to government-sponsored mortgage giants Fannie Mae and Freddie Mac, according to a Bloomberg Intelligence report.
Mortgage Bankers Association data from the report indicates credit availability for mortgages through both programs has reached a record low this year. Recent changes initiated by the Trump administration could exacerbate that long-term trend. These changes are leading to fewer product offerings, staffing cuts and tighter lending standards at the agencies, said Bloomberg Intelligence strategists.
The trend comes at a time when rising home prices have made it more difficult for low-income and middle-class borrowers to qualify for mortgages through Fannie and Freddie. The agencies have launched new affordability programs to expand access to these borrowers by offering lower down payment options. These programs include the HomeReady and HomePossible programs.
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In addition, Fannie created a social bonds program last year that is designed to incentivize more lending to underserved communities, including rural or designated disaster areas. The future of these programs, however, is unclear under the Trump administration and new Federal Housing Financing Agency head Bill Pulte. Fannie and Freddie were told in March to stop programs designed to support first-time homebuyers through assistance with down payments and closing costs for some economically or socially disadvantaged groups.
“Contrary to this media report, Fannie and Freddie have great robust affordability programs, and our actions are reducing the housing and mortgage costs, which skyrocketed under Biden’s four-year inflationary economy,” a spokesperson for FHFA, said in a statement to Bloomberg.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
