Let’s start with the obvious – the U.S. mortgage market is one complex entity. Indeed, according to the latest numbers from the Federal Reserve, the mortgage market for one- to four-family residences was more than $9.9 trillion in the third quarter of 2012, and the 2010 passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act ushered in a whole new bevy of standards and regulations for that market to consider.
Given the size and intricacy of the U.S. mortgage market, it can often be difficult to keep track of its many moving parts; so, to get a handle on where mortgage markets are heading in 2013, we spoke with three experts for some perspective: Brad Boden, the executive vice president of A and N Mortgage Services, Inc.; Justin Lopatin, a vice president of mortgage lending with PERL Mortgage, Inc.; and finally, Christin Luckman, a senior vice president of mortgage lending at Guaranteed Rate.
Meet Us MID-way?
During the recent fiscal cliff negotiations on Capitol Hill, President Obama had floated the idea that, should Congressional Republicans not consent to higher income taxes on the wealthy, that the government would need to consider cuts to valuable government services, including the mortgage interest tax deduction (MID).
Though the MID escaped the initial fiscal cliff discussions unscathed, there’s still a chance it could resurface as a bargaining chip when budgetary discussions resume in March, and Luckman says that if the government decides to reduce or abolish the MID, it would eliminate a significant benefit of homeownership.
“The MID is a large benefit to those who own a home,” she says, “and it’s one of the major benefits of buying a home.”
Luckman says that she always shows her clients the benefits of the MID when consulting with them during the homebuying process, and should Congress do away with the MID, it will be one less benefit she can offer potential homebuyers – and the lack of that benefit, she adds, could impact consumers’ decisions.
Boden agrees that the disappearance of the MID could impact the decision of homebuyers, adding that eliminating it could have significant psychological impacts as well; already, he says, homebuyers are flanked with reports about how difficult it is to secure financing for home purchases, and eliminating the MID could be the last thing to dissuade them from making the purchase.
“Some people have always looked [at the MID] as an added benefit,” he says. “If they take it away, it might discourage some people from wanting to go out and buy a house.”
Lopatin, however, does not see the elimination of the MID having a sizable impact on the housing market, and for two main reasons: one, he does not see the absence of the tax write-off as something that would deter homebuyers from making a purchase; and two, in the end, people will still require housing.
“I don’t think it will have a major impact on housing,” Lopatin says. “People still need to buy a home.”