With Obamacare rapidly bringing many changes to the US economy, and failing to make measurable improvements to the job market, the outlook for the housing industry and US mortgage rates remains uncertain. Efforts in the US House of Representatives to repeal the unpopular law bring further uncertainty to the economy and an expected rise in the US mortgage rates.
Obamacare an Impediment to Hiring: 10% unemployment
US mortgage rates and the national housing market are directly and significantly impacted by the employment rate and job growth statistics. With the jobless rate near 10% for an extended period of time, fewer and fewer Americans are positioned to purchase housing and increase the current soft demand for new housing. Unless companies with the ability to hire and those projecting growth in the coming year feel more confidence in the job numbers, unemployment is not expected to improve.
Small Business Particularly Hard Hit
Because of the employer mandate portion of Obamacare, many of the small businesses that have 40 – 45 employees are not looking to hire or expand their companies and certainly not looking to hire additional workers. If these small business get to the 50 full-time employee mark they will be subjected to a financial penalty. Obamacare requires businesses with more than 50 full-time employees to provide “adequate” health care coverage, or face a penalty of between $2,000 – $3,000 per employee. Most business in the country is small business although the highest number of employees reside in the larger businesses. Still, with small business as the main engine for increasing overall employment, analysts agree that the Obamacare mandate will continue to keep hiring low if not totally stifled.
National health care supporters disagree as they believe few businesses fall into this 50 employee category and in the bigger picture this won’t have a calculable effect on the economy or on overall hiring.
Another factor affecting the attitude of small business is that much of the health care law regulations have yet to be written. Business owners are unsure if the newly written regulations will include additional taxes or other expensive provisions that will further erode profits. Statutory language of the law is also throwing uncertainty on small business as regulators interpreting the language do so in unexpected ways.
High Unemployment Effects US Mortgage Rates
As long as the unemployment outlook remains bleak, Obamacare specifics remain unwritten and undefined, and small business owners delay hiring to blunt penalties and unaffordable health care expenses, the housing market cannot recover, nor will US mortgage rates remain low.