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Mortgage rates jump amid Iran war; housing sector may be in recession
After a brief dip to lows not seen since 2022, US mortgage rates are on the rise again. The war in the Middle East, surging energy prices and the rising likelihood of Federal Reserve rate hikes in coming months are expected to further impact a domestic housing market that is already
under pressure.
Throughout March, the war in the Middle East has driven up energy prices and inflation expectations and pushed the average 30-year mortgage rate to 6.38%, its highest point in more than six months. Additionally, home sales are falling through at rates not seen in years, the pace of rising home prices has slowed substantially, and the market is increasingly imbalanced with sellers outnumbering buyers by close to 50%, according to new private sector data.
With the US labor market wobbling and consumer confidence crumbling under the weight of rising gas and grocery prices, the broader economy has thus far avoided a recession, but the housing sector has not, Margaret Whelan, CEO and founder of Whelan Advisory Capital Markets, said in an interview.
"Housing is in a recession," Whelan said.
Source: S&P Global Market Intelligence
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EO confuses mortgage lender registration
The recent executive order aimed at easing mortgage credit access has left the mortgage industry puzzled, particularly over a section calling for the elimination of "duplicative or unnecessary requirements" for licensing or registration of mortgage loan officers at smaller banks,
American Banker reported, citing industry experts.
Industry experts note that registration for bank-employed mortgage loan originators is already straightforward and not considered a regulatory burden, due to the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act of 2008, the report said.
Source: S&P Global Market Intelligence; American Banker
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An article from QGT Law
The New Power Equation
“A close look at artificial intelligence quickly reveals that one of its most significant challenges is energy consumption. Data centers powering AI may consume up to 12% of total U.S. electricity by 2028. Some estimates suggest that power
demand for AI data centers could grow from 4 gigawatts in 2024 to 123 gigawatts by 2035, representing a thirtyfold increase.”
In this article by Cliff McKinney, a Managing Member, at the law firm Quattlebaum, Grooms & Tull PLLC, an ACB Preferred Solutions Provider, Cliff explores: the AI electrical usage surge; why it's happening; the impact on the real estate industry; and how to prepare for what's coming.
Click here to learn more.
Source: QGT Law
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Bill to authorize emergency transaction account guarantee
ICBA expressed support for legislation that would provide the FDIC with authority to create an emergency transaction account guarantee program to help preserve ongoing stabilization of community bank deposits in a crisis.
Introduced by Financial Institutions Subcommittee Chairman Andy Barr (R-Ky.), H.R. 8075 would provide the FDIC with the authority to temporarily guarantee the deposits of all insured depository institutions that are maintained in non-interest-bearing transaction accounts following a determination by the Treasury secretary of a “banking stress event.” The program would last for not longer than six months, though it could be extended for an additional three months.
In a letter to Barr, ICBA said:
- ETAG authority would create depositor confidence in periods of stress and mitigate the risk of deposit flight from community banks to too-big-to-fail institutions.
- When the FDIC created a temporary TAG program in 2008, it worked effectively during the financial crisis to provide stability and bolster depositor confidence.
- R. 8075 would grant authority for the Treasury and the FDIC to establish a similar program and act quickly in an emergency situation to stabilize community bank deposits and the financial system.
Source: ICBA
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Congress pushes $5 million deposit insurance limit
A bipartisan group of senators and a House Republican introduced companion bills on March 25 that would give the Federal Deposit Insurance Corp. and the National Credit Union Administration authority to raise deposit insurance for non-interest-bearing transaction accounts up to $5 million, 20 times the current $250,000 limit. This is the third time Congress has tried to raise deposit insurance in the past year.
Source: S&P Global Market Intelligence
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Tiered regulation discussed EGRPRA outreach meeting
ICBA urged regulators gathered for an Economic Growth and Regulatory Paperwork Reduction Act outreach meeting to tailor regulation and supervision to reform regulations that are outdated, unnecessary, or unduly burdensome for community banks.
During the event, ICBA staff members offered specific regulatory recommendations, including:
- Right-sizing supervision through a tiered approach tailored to banks’ size and risk profile.
- Implementing a true short-form call report for community banks.
- Streamlining the application process to promote the formation of de novo community banks.
- Recognizing the value of bank-fintech collaboration.
- Easing Community Reinvestment Act regulatory burdens for community banks.
EGRPRA requires the federal banking agencies to review their regulations every 10 years to identify outdated, unnecessary, or unduly burdensome regulations, allowing community bankers to articulate concerns with regulatory burden and its impact on local communities.
Source: ICBA
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Grassroots outreach on yield-bearing stablecoins
As the digital asset market structure negotiations continue among policymakers in Washington, D.C., ICBA is urging community bankers to continue weighing in on the issue with their members of Congress to demonstrate the importance of this issue to community banks.
With lawmakers working to resume consideration of market structure legislation after a markup was postponed in January, ICBA is urging community bankers to use its Be Heard grassroots action center to urge their lawmakers to prohibit the payment of interest, yield, rewards, or similar inducements on payment stablecoins by exchanges, affiliates, and other market participants.
Recent ICBA Advocacy:
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ICBA’s Federal Delegate Board* this month sent letters to the Senate and House saying that passing digital assets market structure legislation without a strong prohibition would threaten the deposits that fuel community lending and support economic growth across America.
- ICBA this month ran an ad campaign in Punchbowl News' daily podcast urging Congress to extend the prohibition on yield-bearing payment stablecoins to all digital asset market participants, along with a digital ad campaign on the issue featuring display and content ads.
- ICBA Digital Assets Subcommittee Chairman Kevin Paintner wrote in a CoinDesk op-ed that extending the yield prohibition will enable community banks to continue serving their vital role in powering local economies.
An ICBA data analysis shows allowing crypto intermediaries to pay interest or yield on payment stablecoins could supercharge growth of the stablecoin market, reducing community bank lending by $850 billion. Contact Congress.
* Jim Gowen, Jr., Merchants & Planters Bank, Newport is the ICBA Federal Delegate for Arkansas
Source: ICBA
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FDIC issuing GENIUS Act stablecoin prudential proposal ‘soon’
The FDIC will soon be issuing proposed prudential requirements for FDIC-supervised payment stablecoin issuers, an agency official told Congress.
Testifying before the House Subcommittee on Digital Assets, FDIC Director of Risk Management Supervision Ryan Billingsley said the proposal would include tailored requirements related to reserve assets, capital, liquidity, and principles-based risk management requirements.
The proposal will add to a growing list of active and anticipated regulatory proposals to implement the GENIUS Act, including the FDIC’s December proposed rule to implement the law’s application provisions. That proposal would establish procedures for the agency to accept and process payment stablecoin issuer applications from FDIC-supervised banks.
The FDIC last month announced a 90-day extension of the comment deadline for the application proposal from Feb. 17 to May 18 following a requested extension from ICBA and other groups.
Source: FDIC; ICBA
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ICBA Capital Summit rescheduled for April 29–May 1
Adapting to the shifting environment in Washington, the ICBA Capital Summit is now scheduled for April 29 - May 1 at the Grand Hyatt Washington—a week earlier than previously planned and no longer at the Westin Washington, D.C. Downtown.
While this change could create planning challenges for community bankers already registered, ICBA encourages community bankers to consult their calendars and attend the event in the nation’s capital to ensure members of Congress hear directly from their community bank constituents.
Learn more and register.
Source: ICBA
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