Potential Homebuyers in Nevada cautioned to Lock-in Mortgage Rates in Light of Anticipated Congressional Reform

As confidence in Nevada’s house market is slowly regained, residents are beginning to see notable improvement in the overall market. Government backed assistance programs, increased availability of alternative loan options, low-interest rates, and the general desire of Nevada residents to reclaim their position as a highly prosperous market, have all contributed to market growth. Even with home values and sales prices on the rise, potential homebuyers continue to be attracted to low interest rates that have enabled many to make the dream of homeownership a reality. However, this could change if proposed changes in the form of Congressional reform are to take effect. 

In a recent news report by the Las Vegas Sun,

“A long-simmering plan to phase out home lending giants Fannie Mae and Freddie Mac got a boost from President Barack Obama this week, increasing the chances that Congress will tackle housing market reform this fall. But this is one occasion when Nevadans might actually want Congress to drag its heels a bit.”

Source: http://www.lasvegassun.com/news/2013/aug/09/would-shift-mortgage-risk-taking-affect-nevadas-re/

Under proposed plan, as stated in the above referenced report,  the “federal government is considering reducing the outsized role it has been playing in insuring mortgage securities since taking over Fannie Mae and Freddie Mac in 2008, and passing credit and mortgage risk back to the private sector.” This report goes on to say:

“In the Senate, those plans have taken the form of a bipartisan bill to replace Fannie and Freddie with a new Federal Mortgage Insurance Corporation that would back loans, but more sparingly (since the housing crash, Fannie and Freddie backed almost 90 percent of new loans). In the House, leading Republicans advocate transferring that role to a non-governmental nonprofit agency, effectively fully privatizing the industry. The idea is that asking the private sector to assume more risk while allowing it a greater role in determining that risk will help the housing economy grow faster in the long run. But in the short run, shifting risk to the private sector means mortgage rates will rise — and that is where things get tricky for Nevada.”

With the potential for housing market reform creating the risk for future increases in mortgage rates, potential homebuyers are cautioned to take advantage of low-interest rates while they still can. In addition, there are a variety of government-backed programs and assistance opportunities, which, as of now, remain an available option for many. Your loan officer can discuss with you how market trends and government reform, may have an impact on you.

This theory holds true for persons thinking of refinancing their home loans.  The FHFA (Fedeal Housing Finance Agency) has extended the deadline for HARP loans to December 31, 2015.  And the FHFA still believes there are a substantial amount of homeowners out there that can benefit from using HARP to refinance their current home loan. 

If you have any housing market related questions, 
contact Casey Moseman at (702) 271-1274.