President Biden and his economic team are intensifying efforts to address elevated mortgage rates and housing costs, recognizing their impact on Americans and their potential influence on the upcoming re-election bid.
In a strategic move, President Biden’s forthcoming budget request will urge Congress to enact a series of measures aimed at expanding access to affordable housing and assisting certain individuals in purchasing homes. Sources familiar with the administration’s planning indicate that housing affordability will feature prominently in the President’s State of the Union address scheduled for next week.
To kickstart these initiatives, the administration unveiled a set of modest executive actions on Thursday, including measures to bolster the supply of manufactured homes. Additional announcements regarding efforts to lower housing costs are expected in the coming days.
The heightened focus on housing affordability coincides with mounting criticism from congressional Republicans regarding high mortgage rates and housing expenses. Allies of President Biden have cautioned that these challenges could adversely affect working-class voters, crucial for his electoral success in November.
While immediate impact on mortgage rates remains limited, President Biden remains abreast of the issue, regularly seeking updates on prevailing rates. Mortgage rates have surged since his inauguration, more than doubling, alongside the Federal Reserve’s adjustments to counter inflationary pressures.
The surge in borrowing costs has significantly impacted prospective homeowners, with monthly payments escalating. As a result, concerns about housing prices, particularly among younger adults, have heightened. Research suggests that high mortgage rates also frustrate existing homeowners, dampening their prospects of selling properties.
READ ALSO: How Los Angeles is Addressing the Affordable Housing Crisis
Recent research by economists at Harvard University and the International Monetary Fund, including former Treasury secretary Lawrence H. Summers, underscores the correlation between rising borrowing costs and subdued consumer sentiment. The study highlights the need for concerted efforts to alleviate housing-related financial burdens on Americans.
While acknowledging the challenges, President Biden’s aides are exploring avenues to mitigate housing costs, recognizing the issue’s significance for Americans. Efforts to secure congressional support for expansive housing plans have faced resistance, but the administration remains committed to addressing the long-term shortage of affordable housing units.
READ ALSO: Blacksburg leaders continue to address affordable housing
As consumer sentiment remains intertwined with housing affordability, White House officials acknowledge the potential for a swift improvement in sentiment with a decline in mortgage rates. However, President Biden’s approach emphasizes respect for the Federal Reserve’s independence, refraining from exerting pressure on interest rate policies.