Reduction in Capital
Capital One announced it will stop issuing mortgage and home equity loans and cut some 1,100 jobs. Rising interest rates, home prices and lack of inventory have application volume down. Many US regional banks have seen slowed loan growth. The challenges presented by the rate environment and marketplace in general are making it difficult for many regional banks to remain competitive and profitable. Non-depository lenders like Embrace Home Loans are much better suited for the challenges this environment presents.
Possible removal of mortgage-interest deduction
Republicans in Congress have drafted a tax reform plan that gets rid of the mortgage-interest deduction, or MID. In the draft bill released last week, the standard deduction is doubled, which eliminates the incentive to itemize for most homeowners. But seemingly leaves them in the same or possibly a better financial/tax situation than if the MID remained. This has some industry analysts less concerned about the impact of the reel on the housing market. The real concern might come from those buying or selling higher end homes or in high value markets. The new tax bill reduces the cap on MID qualifying mortgages from $1 million to $500,000. This would effectively end the MID for those high end homeowners. That along with caps on property tax deductions could have a real impact in many high end markets.
While we have yet to completely figure out Millennials, the first wave of Generation Z – those born between 1995 and 2010 are graduating from college and taking full time jobs. It is time to take a closer look at this new group of potential homebuyers. Similar to Millennials, who are technically old compared to Generation Z, these new potential homeowners also consider a home part of the American Dream. According to Zillow’s 2017 Consumer Housing Trends report, 57% of Generation Z say they considered buying a home when they looked for their last rental. That would mean that they were either in or finishing college or a couple of years out of high school and in the work force when they “considered” buying a home.