Mortgage rate fright fest

Plus, relief for renters and a credit score change

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  October 29, 2022 | Issue #66

Good morning! This week we’re talking about tricky mortgage rates, a mortgage underwriting change and rent price reductions.   Mortgage rate fright fest Jose Velez; Money Welp. It happened. Thirty-year mortgage rates crossed 7% this week, fulfilling every homebuyer’s worst nightmare just in time for Halloween. People — mostly people who made their last mortgage payment long ago or (horror) whose current rate starts with a two — might try to tell you it’s not so bad. Historically, a 7% rate isn’t that high, they’ll say. In 1981 rates hit 18.63%, they’ll say. True enough. As a point of fact, rates have averaged 7.8% since Freddie Mac started tracking in 1971. That’s cold comfort, however, in today’s high-inflation, low-housing-stock environment. Whatever happened 40-years ago, there is no denying that today’s first-time homebuyers — average age 33 — are facing a much tougher mortgage rate environment than they were earlier this year.   Rates have not been this high in two decades, but it’s the speed of the rate increase that’s truly frightening. A year ago, rates were just 3.09%. On Labor Day, they were still below 6%.  Talking to Money’s Leslie Cook, Jerimiah Taylor, of housing tech company OJO Labs, likened the change to driving at 150 miles an hour and then abruptly slowing down to the speed limit. “Suddenly that speed limit feels real slow in comparison to how fast you’ve been going,” he says. Many people who might have wanted to buy were priced out somewhere on the ride between 3% and 7%. After all, a higher rate means monthly payments are now hundreds or even thousands of dollars more even if the actual home price is the same. For people who can still afford to buy, however, there is a treat. Less competition means a less frenzied buying experience and maybe even lower prices. For more: What Mortgage Rates Soaring Past 7% Means for Buyers, Sellers and the Housing Market Related: Prices Would Have to Fall 25% for Homes to Be Affordable Again   Who benefits? Money; Getty Images New government rules about the credit scores mortgage lenders use to evaluate borrowers were announced this week. It’s a wonky fix that’s been in the works for years.  You can read my story for the details, but the main thing to know is that information about a borrower's rent, utility and phone payments will be factored in.  If all goes as advertised, the rule has the potential to help many more households qualify for mortgages. That’s a big if, though.  No timeline for implementation was announced and, as with most big changes, experts warn of unintended consequences. “Greater adoption of alternative data alone is not enough to produce equity-enhancing outcomes,” wrote researchers at the Urban Institute. “It is essential to recognize the degree to which systemic racism is embedded in the housing finance system.”   Relief for renters At last, some good news for renters. After 12 months of double-digit year-over-year growth, the national median rent increased just 9.2% from October 2021 this month. Plus, rents dropped or stayed flat in the vast majority of major markets, according to a new report from Zumper.  The largest declines were seen in — Baton Rouge, Louisiana Lincoln, Nebraska Buffalo, New York San Jose, California Tulsa, Oklahoma For more: Rent Prices Are Finally Falling Again in Most Major Cities   BTW Be careful what you wish for. For years homebuyers and housing experts have been praying for more inventory. Inventory is up — but not for the best reasons. Remember that $250 million listing I shared a few weeks ago? Well, Zillow Gone Wild spotted another eye-popping stat. Common charges and taxes total $74,638 a month. Remote workers have more fun.   Happy hunting, P.S. Share your housing questions with me on Twitter @samsharf or via email at sam.sharf@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.   Money’s Essential Home Buying Resources: Fall 2022 On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?   This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money. AmeriSave Mortgage Corporation (www.amerisave.com/licensing), NMLS ID #1168. Licensed in 49 states and DC. Not licensed in NY. Some people portrayed are professional models. Equal Housing Lender. For licensing information, go to www.nmlsconsumeraccess.org. Privacy Policy • Advertise With Us • We're Hiring! To stop receiving these emails, unsubscribe or manage your email preferences. Copyright ©2022 Ad Practitioners, LLC. All rights reserved. Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA