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The Effect of Tax Reform on the Mortgage and Housing Markets

December 4, 2017

 

With end of the year updates coming in, Inman has released a couple of findings from the Black Knight Monthly Mortgage Monitor Report. The report from the month of October was featured and in the report, the company shared possible effects that tax reform may have on the mortgage and housing market. 

 

Below we have listed some of the bullet points that come directly from the Black Knight study, which used the McDash Loan-Level mortgage performance database to conduct the report. 

 

  • "Doubling the standard deduction may have housing-related impacts on both existing homeowners and prospective buyers."

  • "Under current tax policy, mortgage interest on a $400K home by itself meets the standard deduction limit before including any additional property tax or other itemized deductions."

  • "Under the proposed standard deduction of $24K, mortgage interest alone does not surpass the standard deduction regardless of purchase price when factoring in the House’s proposed $500K maximum loan amount in today’s interest rate environment."

  • "Homeowners who previously itemized deductions – but who will no longer do so due to the larger standard deduction – will receive a lesser net beneft from the proposed tax reform than a similar renting family."

  • "Any impacts to the housing market will likely be more pronounced in moderate to high-priced markets where the mortgage interest deduction (MID) was previously more appealing and heavily utilized."

                                     - Black Knight Monthly Mortgage Monitor Report (October 2017)

 

The report yields some very eye-opening results and trends to look forward to, should a tax reform be implemented. The findings above are just a sample of Black Knight's report, which contains extensive research, as well as, data charts to illustrate the findings. To see a full breakdown of the results and learn more about the effects of tax reform on the housing and mortgage market, click on the image above

 

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