In case you missed it last week, the Federal Reserve’s Federal Open Market Committee has ended bond purchases, finishing its third round of quantitative easing and this could adversely affect the “recovering” housing market next year.
With less money being pumped into the system, the less likely banks and lenders will be to offer loan work outs with homeowners.
As Lynn Effinger writes in National Mortgage News,
“We are not headed for another housing downturn as much as we are still in the major one caused by the housing bubble that burst in 2007-8. Affordability issues, looming interest rate hikes (as have been predicted by Federal Reserve Chairman Janet Yellen and others), too many FHA loans being made (this is the “new” subprime market), federal emphasis being placed on low-income borrowers (as seen in the recent push by the FHFA to have Fannie Mae loosen underwriting guidelines) and other factors are causing house prices to decline once again in many markets.”
Homeowners also need to be concerned about the GOP majority in the U.S. Senate. This second wave of Neo-Conservatives are not consumer friendly and are more deeply entrenched in the pockets of banking lobbyists than the 2010 and 2012 classes.