Mortgage rates near 8%, applications plunge 

The average 30-year mortgage interest rate was reported as high as 7.88%, stoking concerns of surpassing 8% before the end of the month. Currently, some individuals are already facing interest rates above 8%. Freddie Mac reported an average of 7.49%, the highest rate recorded since December 2000. The rate stood at 7.31% last week, while one year ago, it was 6.66%. These reported increases are likely a result of the benchmark 10-year Treasury yield, which mortgage rates typically track, reaching its own 16-year high at 4.8%. Consequently, mortgage applications have decreased 6% when compared to last week, and the pace of home sales has declined by 20% compared to last year.  

"Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields," said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association. "As a result, mortgage applications grounded to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market."

Housing groups have consistently raised concerns about rising interest rates and the impact that is felt by first-time homebuyers and underserved populations who are pushed further away from achieving homeownership. The high rates, combined with an ongoing affordable housing supply crisis, create an even more difficult environment for affordable homeownership. Many buyers are turning to FHA and VA loans or downpayment assistance programs to afford purchasing a home, and some back out of transactions entirely. According to recently released data from the Consumer Financial Protection Bureau, the average monthly mortgage payment rose 46% from 2021 to 2022, going from $1,400 to $2,045. 

“Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation,” said Sam Khater, chief economist at Freddie Mac. “Unsurprisingly, this is pulling back homebuyer demand.”

Senators reintroduce the Community Development Investment Tax Credit Act

A bipartisan group of Senators, led by U.S. Senators Roger Wicker (R-Miss) and Mark Warner (D-Va.), reintroduced The Community Development Investment Tax Credit Act, a bill that would unlock additional equity and financial capital through creation of a Community Development Financial Institution (CDFI) tax credit. The bill aims to promote lasting economic benefits for underserved communities by incentivizing private sector investors that make equity, equity-equivalent investments, or long-term patient capital available to CDFIs.

According to Novogradac, the CDFI credit would be worth 70% distributed as 3% over the first ten credit allowance periods and 4% over the next ten. Applications for allocation of credits would be administered through the CDFI fund, with funding amounts set at $1 billion in 2023, $1.5 billion in 2024, and $2 billion for each year thereafter. The bill is supported by the American Bankers Association, Opportunity Finance Network, Local Initiatives Support Coalition, CDFI Coalition, and others.

“Our country was built by small business, but many in low-income areas have trouble accessing the financing they need to launch and grow their businesses,” said Senator Wicker in a press release. “CDFI investments play a pivotal role in bridging these gaps. The proposed tax credit in this legislation would help address the challenges faced by small business owners and provide an alternative to predatory loans.”

HUD announces funding for housing discrimination, seniors, and other projects

HUD is allocating over $30 million to combat housing discrimination nationwide through the Fair Housing Initiatives Program (FHIP). These funds will support fair housing education, outreach, testing, and enforcement efforts. HUD annually provides resources to organizations enforcing fair housing laws and educating the public. The grants are distributed across various categories, including Education and Outreach Initiative (EOI) with $9,466,347, EOI – Test Coordinator Training with $500,000, Fair Housing Organizations Initiative (FHOI) with $3,700,000, and Private Enforcement Initiative (PEI) with $16,704,250. Interested parties can apply for funding through www.grants.gov until November 30.

HUD’s Office of Multifamily Housing Programs has also allocated $160.1 million in grants to non-profit organizations supporting the development and rehabilitation of affordable multifamily rental housing and project-based rental assistance for low-income seniors. These grants, provided under HUD’s Section 202 Supportive Housing for the Elderly program, will enable the construction of 1,262 new deeply rent-assisted units and the development of mixed-income communities, totaling 1,788 homes.

“The funding announced today shows the Biden-Harris Administration is investing in Americans at every stage in life, working tirelessly to do everything we can to make sure older adults have the resources they need to stay housed and safe, especially as we witness a troubling rise in homelessness among seniors,” said HUD Secretary Marcia Fudge. Recent media reports have highlighted the issue of a “silver tsunami” of rising homelessness for older Americans.

HUD has also awarded $75 million in loan guarantee commitments to the cities of Omaha, Neb., and Fresno, Oakland, and Redding in Calif., supporting diverse projects for public safety, economic development, and housing improvements. Omaha will establish a $20 million Affordable Housing Loan Pool, while Fresno plans to utilize its $20 million loan to build a Senior Activity Center. Oakland’s $34 million loan pool will enhance job creation, affordable housing and equity. Redding will allocate $2 million to improve South City Park focusing on removing mobility barriers.