‘Affordability’: Consumer Concerns and Government Proposals

Bullish:

• $FNMA - Government-sponsored enterprises expanding MBS purchases by $200B to reduce mortgage spreads and support housing affordability, with potential for additional supportive measures.

  • “The two things so far that we have seen are MBS purchases, mortgage backed security purchases by Fannie Mae and Freddie Mac. Dollars 200,000,000,000 is what has been announced.”

    Alec·9:17

  • “our mortgage strategists have estimated that will reduce mortgage spreads and all else equal mortgage rates, like on a thirty year mortgage by 15 to 20 basis points”

    Alec·9:52

  • “I think from here, what they could still maybe do would be some additional things through Fannie and Freddie. So possibly providing financing for home building rather than just home purchase”

    Alec·11:06
• $HOMEBUILDERS - Housing shortage driving long-term demand for homebuilders, with potential legislative support for zoning reforms and construction financing coming.

  • “there is housing legislation that might pass the House as soon as next week, the week of February 9, that would take some incremental steps on zoning reforms”

    Alec·11:38

  • “giving states and localities financial incentives, Frankly, relatively small financial incentives, but nevertheless pushing them a little bit to streamline zoning, reforming environmental permitting”

    Alec·11:49

  • “possibly providing financing for home building rather than just home purchase”

    Alec·11:14

Bearish:

• $REITS - Institutional single-family home purchases being banned by administration, limiting REITs' ability to expand residential portfolios.

  • “the other piece that we saw announced is a ban on institutional purchases of single family homes”

    Alec·10:14
• $CREDITCARD - Administration proposing 10% interest rate cap on credit cards and limits on interchange fees, threatening profitability of credit card companies.

  • “the president proposed a 10% interest rate cap on credit card interest rates and then also endorsed limits on interchange fees”

    Alec·16:56

  • “essentially the fees that credit cards charge retailers that presumably get passed through to some extent to consumers”

    Alec·17:05
• $CONSTRUCTION - Weak productivity growth and technological innovation in construction sector persisting for decades, with regulatory obstacles and labor shortages constraining growth.

  • “productivity growth in the construction sector has been quite weak over the last several decades”

    David·13:39

  • “Technological innovation within the construction sector has actually been quite weak over the last several decades”

    David·14:28

  • “the construction sector has not benefited as much from technological advances in other sectors like information technology, because it tends to be more distant on the supply chain”

    David·14:35

  • “there was an exodus of workers from the sector after the housing bubble burst, and in an industry that relies on a bit of an apprenticeship model to train the next generation, that's had a long lasting echo effect”

    David·15:46