Will the new mortgage rule really hurt home buyers with good credit? That’s what some mainstream headlines are saying.

This week’s Hot Sheet recap covers what the new FHFA mortgage rule is really about, markets that are booming vs. those that are cooling, housing inventory and mortgage demand. 

Dive in below for some of this week’s highlights. 

FHFA’s New Mortgage Rule

Host Byron Lazine covered FHFA’s new mortgage rule on Thursday and Friday this week, citing a change that will go into effect on May 1st. 

But before we break down what’s changing, it’s important to note that mainstream media has their headlines (not to mention the information) all wrong. Take a look at some of them from this week:

So, what’s really going on with the new mortgage rule? (Hint: it’s not something Biden made up.)

It all has to do with the fees, or Loan Level Price Adjustments (LLPAs), imposed by Fannie Mae and Freddie Mac for the majority of new mortgages. LLPAs change based on a variety of factors, including credit score, loan-to-value ratio, occupancy, and debt-to-income ratio. 

The changes are meant to lower the fees for those with credit scores under 680. In doing so, there are some instances where borrowers with higher credit scores will pay more than they used to—specifically for those with a 15-20% down payment. This chart from Mortgage News Daily breaks down the changes. Orange and red cells highlight when borrowers will pay more, and yellow and green showcase when borrowers will pay less than before the new rule.

FHFA mortgage loan changes _ Mortgage News Daily

To dive in deeper, two sources that provide more information include FHFA’s announcement and this post from Mortgage News Daily.

Watch the breakdown of Thursday’s segment here and Friday’s segment here.

Boom or Bust? It all depends on your market

It’s not a Hot Sheet recap without some Lance Lambert articles. This week, Byron covered Booming Scranton, falling San Jose and Things are getting really weird in the housing market to showcase the fact that it’s all about the local stats in today’s market. 

In other words, some markets are seeing cooling prices and a slight tick up in inventory, while others are seeing price increases with limited options for buyers. It’s not enough to rely on nationwide market updates and reports—agents must be analyzing local trends for different areas and price points within their markets. 

This is a breakdown you don’t want to miss, as Byron shares what’s happening in different markets throughout the U.S. Check it out in full here.  

Housing Inventory and Mortgage Demand

It seems like the entire industry has been waiting for the spring market to hit, yet week after week, inventory remains low and mortgage demand continues to fluctuate along with the rates. 

To start the week, Byron covered Housing Wire’s inventory tracker—and instead of inventory increasing (as we’ve grown accustomed to in spring), it fell. Active inventory decreased by 5,383 homes the week of April 10th and remains near all-time lows. Low inventory remains a significant hurdle for buyers who have been on the search. While many were hopeful this spring would bring some more properties to the market, we’ve not yet hit bottom. 

Another number continually being watched is mortgage demand. As rates jump up, there continues to be resistance on demand. Case in point: as mortgage rates increased back over 6.5% the week ending April 14th, mortgage demand dropped by 8.8% from a week earlier.

Typically, the industry doesn’t see mortgage rates jumping up and down like this. So, it’s something you’ll have to continually look at daily and educate your clients so they understand what the fluctuations mean for their monthly payments.

Watch the full breakdown of housing inventory here and mortgage demand here.

For access to all the charts and resources from the Hot Sheet, sign up for BAMx.