One thing I know…the only constant is change. That goes for real estate and mortgages too. Here are a few notable changes for 2018:
- Interest rates are projected to continue their rise. Bets are, the Federal Reserve Board (Fed) will raise Prime interest rates 3 times in 2018. Estimates of 0.25% bump per meeting will result in 5.25% by year end. Although there is not a direct correlation between Fed rates and mortgage rates they do share a common trajectory. Experts predict purchase money mortgage rates may top 4.50% for the first time in 7 years. 50% is still historically low and a great rate for first time buyers. Many of us moved into our first homes at 11% with A+ Credit and were happy to do so.
- Differences in mortgage interest tax deductions: You will see mortgage interest deductibility differences in the final tax reform plan. The plan does not allow taxpayers to deduct interest for new nor existing home equity loans, with a modification provision for 2026. It is yet to be determined if this will have an impact on the attractiveness of home equity loans. Another difference affecting mortgage interest tax deductions involves the increased standard deduction. At $24,000, almost double that of 2017, more taxpayers who currently itemize may no longer realize a benefit of itemizing making the mortgage interest deduction moot.
- Regulatory changes: In addition to tax reform, mortgage regulations are under the microscope. Improvements to The Community Reinvestment Act (CRA) could make it easier for mortgage lenders to help consumers finance homes. Alterations to the Dodd-Frank Wall Street Reform and Consumer Protection Act may become reality. Changing of the guard at the Department of Housing and Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB) and other government agencies could yield positive results for our communities and our country.
With so much changing, it is good to know that you can still count on MTC Federal as a trusted partner to help you on the home ownership journey.
Contact a MTC Federal Mortgage Specialist today to talk about the changes and how they may affect you!