At the end of March, President Biden’s economic advisers announced a $3 trillion infrastructure plan to rebuild US infrastructure. This is called the “American Rescue Plan.” The goal of this plan is to boost the economy, reduce carbon emissions, and narrow economic inequality.
This infrastructure plan will most likely gain funds through tax increases. Primarily on corporations and the wealthy. So, the plan proposes raising the corporate tax rate to 28% from the current 21%. Then, effectively repealing the changes to the corporate tax made under the Trump administration’s sweeping tax cuts in 2017.
Administration officials caution that details of the plan remain in flux. But the enormous scope of the proposal highlights the aggressive approach the Biden administration wants to take.
What does the infrastructure plan mean for housing?
This infrastructure plan represents the most sweeping national investment in decades. The plan includes over $200 billion allocated for housing. Also, this focuses on low to middle income homeowners, as well as prospective buyers.
As part of the initiative, according to Biden, around two million affordable homes and commercial buildings are built and renovated over the next decade.
Additionally, Biden is asking Congress to get rid of exclusionary zoning laws. These, he says, inflate housing and construction costs. So, this is something that has affected homebuilders in every state for the past year.
How should the mortgage industry react?
Infrastructure investment typically goes hand in hand with housing investment. So, the housing component of this bill is very important to consider in order to positively impact communities.
Many see the building of new homes as an economic stimulus in itself. This is due to people spending money on furniture and fixings for new homes.
In a statement, the White House said, the infrastructure plan “will invest in America in a way we have not invested since we built the interstate highways and won the Space Race.”
House Speaker Nancy Pelosi told the Democratic caucus she hopes to pass the plan at the beginning of July. Affordable housing has long been a point of focus for Biden and his team. Since there are many unknowns in 2021 that can affect housing and lenders, be sure to have plans in place to remain flexible. Keep up with the latest changes and continue to provide the best borrower experience!