The expansion of the Federal Reserve’s portfolio of Treasury debt and mortgage-backed securities has a bigger impact on the credit markets than paying banks interest on excess reserves.
Contrary to expectations about growing mortgage lending volumes, current industry trends suggest a gradual reduction in capacity for both lending and servicing that should alarm policymakers.
Over the next 40 years, the rate of homeownership is likely to continue to decline further as changes in demographic trends, increased regulation and stagnant incomes make that dream harder to achieve.
Republicans are unlikely to push the ball forward on reform of the federal housing agencies, but Congress has a number of other opportunities to make changes that will encourage mortgage lending.
