The upside to chaos

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Chaos in Washington is keeping a lid on mortgage rates, which contributes to affordability.

The firing of FBI director Comey and the ongoing Russia probes have put pressure on the Trump administration, which in turn has added a touch of volatility to the market.

Stocks suffered their worse one-day decline in May, dropping more than 300 points. The drop in equities has helped mortgage bonds/rates, which have ticked down to some of the best levels of 2017.

Shortly after the election, the 30-year fixed rate moved up to approximately 4.5 percent, but now has moved down into the low 4s. This happened even with the Fed raising short-term rates and the Dow hovering around 21,000.

Keep in mind that the mortgage market doesn’t automatically move as the Fed moves. Bonds and rates can move based upon how the market and economy reacts days, weeks and even months after the Fed makes its decision.

I anticipate that if we have a long and drawn out investigation of President Trump’s administration, the market may continue to move sideways until we have a clear resolution.

The housing market is continuing to do well, with existing home sales hitting new highs and new home sales continuing at a healthy pace.

Reduced inventory and an increase in buyers has put some upward pressure on home prices, which is concerning. The only way that this trend can continue is if mortgage rates continue to stay low or go lower.

If rates move up and we continue to see prices pushed higher than average, buyer will hit a breaking point at which they will not qualify for the homes that they want, and even if they do quality, the overall cost may be so high that they won’t feel comfortable with the total housing payment.

Loan programs are beginning to get a bit looser, as they were in the early 2000s, before the housing bust. Are we on the verge of another housing bust? Time will soon tell if this mortgage financing will continue to keep the housing marketing humming along or if this is just the beginning of another bubble.

To contact me, call 773-557-1000 ext. 15, e-mail or visit

About Ron Ricchio

Renato (Ron) Ricchio is president of Chicagoland Home Mortgage. He grew up in Westchester and attended St. Joseph High School and DePaul University, taking a job as a loan officer in the mortgage industry soon after graduating with a bachelor's in finance in 1991. He started his own company in 2001, which he operates today. He has been ranked in the top 150 loan originators in 2010 and 2011 by Origination News. Ron is happily married with three beautiful children. A board member of San Francesco Di Paola Society and the founder of Ricchio Family Toy Drive for Lurie's Children's Hospital, he enjoys cooking and spending time with family and friends.

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