I hope you are enjoying these dog days of summer! I’m stopping by today to keep you informed about the latest developments that could impact your homeownership journey. This past week brought some interesting shifts, from Federal Reserve insights to a major change in credit scoring, all while mortgage rates saw a slight uptick. Let’s dive in.
Understanding the Market: Fed, Rates, and What’s Ahead
The big news this week revolved around the Federal Reserve’s June 17-18 meeting minutes, released last Wednesday. The Federal Open Market Committee (FOMC) decided to hold the federal funds rate steady at 4.25% to 4.50%. This signals a cautious, stable outlook on the economy, with officials noting solid economic activity and low unemployment, despite lingering uncertainties around trade policy.
While there was little support for an immediate rate cut, some members did express openness to a reduction at the July 30 meeting if data supported it. The key takeaway? Any policy shifts will be heavily dependent on incoming data, particularly inflation and employment figures. This “wait and see” approach means we’ll be keeping a close eye on upcoming economic reports.
Speaking of rates, after a five-week decline, mortgage rates saw a slight increase this week. The average 30-year fixed-rate mortgage (FRM) rose by .05 percent as of July 10, up from the previous week. This uptick followed a stronger-than-expected jobs report. Interestingly, despite a decent inflation reading that would typically suggest lower rates, certain factors, particularly the “shelter” component of the Consumer Price Index (CPI) and the impact of tariffs on specific categories, led the market to justify the Fed’s cautious stance.
Looking ahead, the rest of this week is packed with high-impact economic reports, including the all-important Consumer Price Index (CPI), which measures consumer inflation, as well as the Producer Price Index (PPI), which tracks wholesale price trends. I’ll be watching closely to see if tariffs have begun to impact prices, though this hasn’t transpired yet. We’ll also see new housing readings and consumer sentiment numbers.
Good News for Homebuyers: A Major Shift in Credit Scores!
In genuinely exciting news for prospective homebuyers, the Federal Housing Finance Agency (FHFA) announced a significant development this past Tuesday. Mortgage lenders can now use VantageScore 4.0 as an alternative to the long-dominant FICO score for underwriting government-backed loans through Fannie Mae and Freddie Mac. This move, effective immediately, aims to increase competition and potentially reduce fees associated with credit checks.
What does this mean for you? VantageScore 4.0 is designed to be more inclusive, factoring in alternative data like rent payments reported to credit bureaus. This could significantly expand access to mortgage opportunities, particularly for those with limited or non-traditional credit histories. It’s a positive step towards helping more “forgotten Americans” qualify for homeownership who might have previously been excluded. By potentially lowering credit assessment costs and broadening eligibility, this shift could ease the path to homeownership, especially for first-time buyers or those with thin credit files.
The Persistent Housing Shortage: A Closer Look
Despite ongoing construction, the U.S. housing shortage has hit a record high, with Zillow reporting a deficit of 4.7 million homes nationwide. This persistent shortage continues to contribute to affordability challenges, stifling borrower demand even as interest rates have seen some recent declines.
An estimated 8.1 million families are now “doubling up” with non-relatives, particularly millennials and Gen Z. Many of these households would likely purchase or rent independently if more affordable options were available.
The shortage isn’t evenly distributed, with high-cost, regulation-heavy metros like New York City, Los Angeles, and San Francisco facing the most significant deficits. Conversely, cities with fewer zoning restrictions, such as Houston, Atlanta, and Phoenix, have seen more new housing and less price pressure. Experts are now advocating for “smarter and denser” building through zoning reform, allowing for more accessory dwelling units (ADUs), duplexes, and triplexes, especially in single-family zones, to help ease the affordability crisis.
Stay Informed to be an Empowered Investor
The mortgage market is constantly evolving, and staying informed is key to making the best decisions for your financial future. Whether you’re a first-time homebuyer, looking to refinance, or curious about the current market, I’m here to answer your questions and guide you through the process.
Do any of these market trends spark questions for you? I’m always happy to chat!
