Rates, Real Estate, and Recession

Inflation is the big buzz word in 2022 and how quickly times have changes in the mortgage world. We are seeing huge lender like Rocket and Better.com with tremendous layoffs with the new frontier we enter now that rates are up a good 1.5-2% above where they were over the past 2 years. What is next for mortgage rates and the economy? Obviously, nobody knows but the signs of recession are popping up everywhere. What does that mean for mortgage rates? 

If we look at history, In the 70’s we saw inflation go from 7-14% and Mortgage Rates went from 12% to 18%. When Paul Volcker stepped in, he raised the Federal Funds rate from 12-20% and slowed the economy and mortgage rates went back down from 18% to 12%. In the 2000’s we saw Allen Greenspan Raise the federal funds rate 2% and we saw mortgage rates go from 8.5% to 5.5%.

The big new buzz word is recession. For the most part, when the Fed Hikes rates, we go into a recession. Historically, we can see mortgage rates could have a bright future once we get past the Fed Run Off even though they are elevated right now. 

As far as real estate, inventory is the difference today vs the 2007 peak. We have 14 million new households since then and 3 million homes. Demand should remain strong.  So, while we have some tough months ahead for mortgage rates, we think the future looks very bright and a higher rate may be an opportunity for buyers to get in this summer when they were outbid before.

If you or someone know someone looking to buy in this changing market, remember, independent brokers can pivot better than any major lender in markets like this (or in any market for that matter).  We literally can shop ALL the wholesale lenders in one place the day your offer gets accepted, so we know where the best place is for the loan THAT DAY!  Find out more at www.freshhomeloan.com or call 510.225.6407.

Garrick Werdmuller

(510) 282-5456