Something really strange is going on with the mortgage markets.

About a week ago, Fannie Mae and Freddie Mac issued new guidance pertaining to mortgage rates which to be honest, is just mind boggling! The good news first, the mortgage rates are going 'DOWN' BUT for the people who have credit scores under 680. Now the bad news, the mortgage rates are going 'UP' for anyone who has a mortgage score of 680 or above.

Yes, you read that right. Even I couldn't believe my eyes when I read this news and I had to re-read the article to make sure. I know this does not make any sense because all these years we were taught that credit rating is precious and an individual should attempt to pay bills on times, in order to maintain a high credit score.

But the with the new guidance, this norm goes out of the window and it is just insane. The rationale behind this is that the government wants to subsidize borrowing for people with bad or risky credit and it's being done at the expense of people with great credit. Back in 2006-2008 era, when something similar to this was attempted, things didn't end well. I still remember that with the introduction of exquisite lending products, the demand was goosed but hundreds of thousands of naive people got sucked into the market that eventually everything blew up. It eventually led us to the 'Great Recession'. It seems to me that we are going down the same path again!

You can read more on this news here, https://www.cbsnews.com/boston/news/mortgage-fee-changes-good-high-credit-scores/

I hope I am wrong about the end result but we shall see.