4 Weeks of Rate Growth

This week, rates for 30-year fixed mortgages ticked up to 4.20 percent, a gain of three basis points over the previous week, and the fourth consecutive weekly gain, according to Freddie Mac's latest data.

The 15-year fixed-rate mortgage averaged 3.64 percent, increasing by two basis points, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage was down one basis point to an average 3.77 percent. Meanwhile, inventory of existing homes dropped, and mortgage applications hit a 9-year high in the past few weeks, according to the Mortgage Bankers Association.

But lending standards are going to get a bit more strict. Last month, the Federal Housing Administration said it would start to require manual underwriting for mortgages that may be more risky. The agency, which guaranteed about 23 percent of new mortgages in 2018, is concerned about borrowers who have lower credit scores in addition to higher debt-to-income ratios.

So-called “risk layering” was commonplace, even encouraged, during the housing bubble of a decade ago. In the squeaky-clean lending environment that emerged after the financial crisis, lenders have been more cautious. But lean supply has driven home prices so high, even as stagnant wages and higher student debt have both made homeownership more challenging for many Americans, especially younger ones.

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