He believes it could be a method to curb housing costs
Former President Donald Trump has proposed banning mortgages for undocumented immigrants, framing the move as a way to ease pressure on housing costs.
Speaking at the Economic Club of New York on Thursday, Trump claimed that undocumented immigrants are contributing to rising home prices, despite their small presence in the mortgage market.
However, it is questionable whether this aligns with the numbers. According to a recent Urban Institute report, only 5,000 to 6,000 mortgages were issued in 2023 to holders of Individual Tax Identification Numbers (ITINs), which are used by individuals who don’t qualify for Social Security numbers but still file taxes.
This represents a tiny fraction of the overall mortgage market, with 4.3 million first mortgages issued nationwide that same year, according to Equifax.
Most ITINs are issued to immigrants from Latin American countries, and while the USA Patriot Act of 2001 allows banks to accept ITINs as a form of identification, obtaining a mortgage with one is difficult.
Despite their small footprint, ITIN borrowers have historically faced higher interest rates and stricter lending requirements.
“A small yet growing set of lenders offer mortgage products to ITIN holders, often at higher interest rates and with stricter lending requirements, despite anecdotal evidence that this type of lending does not pose additional risk to the housing finance system,” the Urban Institute report noted.
Along with his promise to ban mortgages for undocumented immigrants, Trump outlined additional steps to tackle housing affordability. He said he would cut regulations that contribute to high building costs.
The former president also predicted that falling interest rates would push mortgage rates down to 3% or lower, making home financing more affordable.
Trump’s stance on undocumented immigrants and housing is part of his broader immigration policy, which includes a promise to deport millions of people living in the US illegally. But this approach may have unintended consequences for housing affordability.
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The construction industry, which is already grappling with labor shortages, relies heavily on immigrant workers to build homes. Limiting the workforce could hinder the industry’s ability to meet housing demand, potentially pushing prices higher.
The shortage of housing supply has been a key driver of rising home prices in recent years. While Trump also vowed to cut regulations and open up federal land for development, the labor shortage could still pose a major challenge to increasing the housing supply.
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