WTF Is Happening To The Housing Market?!

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NO MINIMUM CREDIT SCORES
Fannie Mae will remove its long-standing 620 minimum credit score requirement starting November 16th. This shift is meant to expand access to borrowers with limited or non-traditional credit histories. Instead of relying on credit scores, lenders will assess overall risk using factors like rent, utility, and phone-payment history through alternatives such as VantageScore. The goal is to qualify strong borrowers who may appear “risky” due to thin credit files.

ALTERNATIVE CREDIT EVALUATION
Without a hard credit score cutoff, lenders will evaluate risk using more granular data. Payment history on rent, utilities, and recurring bills can now support a borrower’s eligibility. This helps long-term responsible payers who’ve never built traditional credit but have demonstrated financial reliability. Lenders emphasize that underwriting standards remain strict. This simply opens the door to borrowers who’ve been overlooked due to limited credit history rather than poor credit behavior.

MORTGAGE PORTABILITY (PORTING)
A newly discussed idea would allow homeowners to transfer their existing mortgage (and interest rate) to a new property. For example, a 3% loan on a current home could be carried over to a more expensive home, with the borrower taking out an additional loan only for the difference. This could unlock frozen inventory by encouraging owners with low fixed rates to move again. Existing homeowners benefit the most, while first-time buyers could see more listings hit the market.

THE PROBLEM FOR LENDERS
Portable mortgages fundamentally break the banking model. Banks and investors assume loans will be paid off roughly every 12–13 years when owners move. That early payoff helps recycle capital and avoid decades of holding low-yield loans. Allowing mortgages to follow borrowers would trap lenders into decades-long low-rate obligations, potentially recreating the same balance-sheet pressure that helped sink Silicon Valley Bank. To compensate, lenders would likely raise rates on new loans or require government subsidies.

THE REAL FIX: MORE HOUSING SUPPLY
All current policy changes, whether expanding loan limits, removing credit score floors, or proposing mortgage portability, attempt to tackle affordability from the demand side. But the core problem remains supply. Without zoning reform and increased building, affordability will continue to worsen. Long term, expanding construction – NOT reshuffling loan structures – is the only durable solution.

Otherwise, I hope you like living with roommates.

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