US President Donald Trump’s administration is pushing ahead with plans to increase the minimum federal mortgage rate on existing homes.
The move follows the death of a federal judge in the state of Arizona who ruled that Trump had illegally targeted some of the state’s poorest residents with the proposed hike.
The Federal Housing Finance Agency (FHFA) is expected to announce its next mortgage rates later this week, as well as the next refinancing rate.
The rate increases are likely to add pressure on many of the mortgage-lending firms already struggling with the financial crisis.
The US House of Representatives voted to approve the increase in July, with Democratic Representative Joe Barton and Republican Representative Joe Wilson of North Carolina reacting with anger.
House Republicans and President Trump have previously criticised FHFA for not making changes to reduce the mortgage rate, and the agency’s chief financial officer has also criticised the administration for not doing enough to combat the rise in mortgage defaults.
In a speech in August, Mr Trump said that if the rates increase passed, “I will say to Congress: I am going to sign this bill into law, and we’re going to make our mortgage rates even lower”.
The White House is also looking at ways to ease the impact of the housing crisis on the economy.
In a blog post this week on the White House website, White House Economic Advisor Gary Cohn said that a “sustainable and resilient housing market” was vital to the US economy.
“This recovery is rooted in our ability to invest in our nation’s infrastructure and the ability to create jobs in the manufacturing sector and the services sector,” he wrote.
“But we cannot continue to fail in our efforts to build a more just and prosperous economy if we do not make significant progress on our housing front.
The FHFE also issued an advisory on Friday urging Americans to refinance mortgages to as low as 0.85 per cent of their value, which is the lowest rate it has ever approved. “
We must build on the progress we’ve made in housing since the start of the crisis, and continue to support the efforts of the FHFC to reduce loan defaults and improve home ownership,” Mr Cohn wrote.
The FHFE also issued an advisory on Friday urging Americans to refinance mortgages to as low as 0.85 per cent of their value, which is the lowest rate it has ever approved.
On Wednesday, FHFW said that the rate hike was a “mistake”, and said it would “review its actions” with its regulator, the Federal Housing Administration (FHWA).
The FHA has been criticised for the housing market in the past for its inability to lend to borrowers, and Mr Trump has been critical of the agency for its handling of foreclosures.