Beginning on May 1, the Biden administration began to enforce their new mortgage rule which punishes buyers with good credit. The administration is requiring adjusting mortgage calculations to reduce costs for people with low credit scores by penalizing homebuyers with a FICO credit score at 680 or above. The new policy brings with it a raft of dangers to borrowers and financial stability, and could have the effect of decreasing homeownership among the middle class due to skyrocketing costs for creditworthy borrowers. This new framework will increase mortgage costs for lower-risk individuals, handicapping those borrowers with larger down payments, and will disincentivize good credit behavior—all during an inflation crisis.
