Mortgage rates are climbing at a speed not seen in decades, raising three percentage points in the first third of this year alone. Low-interest rates are now in the rearview mirror, and if the current pace is any indicator, rates will be upwards of six and a half percent by the end of the year. Experts predicted four percent by the end of 2022, but unfortunately, that milestone was reached several months ago. The current five and a half percent is for people with the best credit scores, the ability to repay, and can put approximately 20% down. What hope is there for those with not such stellar credit? New loan programs are being introduced weekly to cover the spectrum of home seekers, but the cost of those loans has skyrocketed. In less affluent neighborhoods, this can be an even more widespread issue, as banks are not as willing to lend in certain areas. Is there a lending and appraisal bias in the industry? Are people of color finding greater difficulties in obtaining affordable loans and being denied more readily? Shouldn’t credit risk be judged individually and loans be approved on the value of the home, not the neighborhood?

With the Fed raising rates, getting a loan will be much harder across the board. The current climate harkens back to the early 2000s, bringing an increased possibility of fraud in the process. Back then, loans and properties were challenging to procure, banks shut down for months at a time, and income for those working in the mortgage industry decreased dramatically, leading to the fudging of paperwork and loans going through that shouldn’t. That fraudulent activity led to the crashing of the system, causing the economy to tumble, so the industry needs to resist the temptation to repeat that behavior in today’s environment. Guests include:

– Josh Thompson (Malibu Funding) shares information about building costs vs. sales comps.

– Bill Orr (Malibu Funding) talks about why, despite rising interest rates, now is a good time to buy.

– George Gonzales (Malibu Funding) discusses the affordability of monthly payments.