Mortgage Update - March 10th, 2025
This week’s newsletter might feel a little doom and gloom, but here’s the deal—Kreg and I don’t sugarcoat. If we only told you the good stuff, why trust us when things get real?
Right now, we’re seeing cracks in the economy—both nationwide and right here in our own backyard. Everyone wants rates to drop (us included), but there’s always a reason behind it… and sometimes, that reason isn’t exactly positive.
Let’s dive in!
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Read time: ~4 minutes
DOGE Bites the US Labor Market 🐶
February’s jobs report missed the mark, adding just 151,000 jobs (vs. 160K expected). Meanwhile, unemployment ticked up from 4.0% to 4.1%, signaling that cracks in the labor market are getting harder to ignore.
The effects of the Department of Government Efficiency (DOGE) are now hitting the jobs data, with federal employment dropping by 10,000 last month. And with over 2 million federal workers still in the mix, this may only be the beginning.
Layoffs aren’t only affecting federal employees. Challenger, Gray & Christmas, Inc., a company that helps laid off employees find new work, mentioned in a recent report that 172,017 jobs were cut by employers in February. That’s a 245% increase from January and the highest monthly number since July 2020.
We’ve seen rates pull back over the last few weeks, which could be the markets preparing for a continued weakening of the labor market. Government hiring gave the economy a boost in 2024, but with no new major job drivers in 2025, DOGE’s cuts could continue to squeeze hiring and push unemployment higher.
Key Takeaway: This is why I’ve been mentioning in a handful of meetings this past week that we have to be careful what we wish for. Everybody wants lower rates. But rates don’t go down without a reason. Do we want lower rates if more folks are unemployed without the means to afford a home?
Student Loans are BACK 🎓 and Scores are Dropping 📉
For the last five years, student loans were on pause, and mortgage lenders had loose guidelines that helped buyers qualify for more home.
Those days are over.
Last month, federal student loans have started reporting to credit bureaus again—and it’s hitting borrowers harder than a surprise pop quiz.
According to the Wall Street Journal, almost 22 million borrowers are out of forbearance with 9.2 million already BEHIND on payments. Some have already seen a 200 point drop as missed payments start to rack up.
What Does This Mean for Homebuyers?
💸 Lower credit scores = Higher mortgage rates
💰 Bigger student loan payments = Less purchasing power
If your pre-approved buyers have student loans, they need to check back in with their loan officer ASAP. The last thing they want is to get under contract and find out they’re not the “A+ student” they thought.
More Doom & Gloom 😬
Slower hirings, higher unemployment and student loans hammering credit scores doesn’t even scratch the surface. Here are some additional quick hitters from last week:
Q1 GDP Revised WAY Down
GDP (gross domestic product) is a key indicator of economic activity. The official estimate is typically released with a delay. The Federal Reserve Bank of Atlanta, however, provides a GDP forecast they call GDPNow, and it’s not looking good.
The US economy has been chugging along nicely with positive GDP quarterly gains since Q2 of 2022.
Q1 and Q2 tend to be the slowest quarters of the year, but this latest forecast for Q1 2025 is frightening. The Atlanta Fed revised their estimates for Q1 from +2.3% DOWN to -2.4%.
As a note, the traditional sign the economy is in an recession is two consecutive quarters of negative GDP growth. It’s looking like we might have the first in Q1.
“Welcome Home” Grant Halted 🛑
It was over almost before it began. The highly anticipated Welcome Home grant from the Federal Home Loan Bank of Cincinnati abruptly halted the program less than 48 hours after accepting applications. Anecdotally, we know many lenders had not exhausted all funds before the program was shut down.
Many first time homebuyers were hoping to take advantage of the limited program to help cover the out-of-pocket on a new home.
There are still products like OHFA’s down payment assistance program that are still available.
Intel Delays Completion of First Ohio Chip Factory to 2030
We have to wait until the next decade before we see a computer chip come off an Ohio assembly line 😢 as Intel pushes expectations out to 2030/2031.
Let’s find something positive about the delay. It will give more time for roads, utilities and community services to prepare for the influx of growth as well as stabilize the market with a more drawn out hiring boom.
That’s enough positivity, back to the gloom…President Trump noted in his State of the Union on Tuesday that he would like to repeal the CHIPS Act, which granted Intel almost $8 billion in federal funding for the plants. Uh oh…
It appears his comments caught many by surprise. But lawmakers, including Republicans, believe there are too many other items higher on the President’s list to deal with.
“I don’t see a huge appetite for that,” said a senior Senate Republican aide 😅
Join Us For March Madness - March 20th
Realtor friends, it’s tournament time, and we’re kicking off the madness in style! Join us at Lower.com Field on Thursday, March 20th, from 11 AM - 6 PM for a full day of hoops, food, drinks, and giveaways! 🎉
Come hang out, catch the first round of the college basketball tournament on the big screens, and enjoy the action from the Lower.com Lounge. Whether you stay for a game or just drop in for a drink, it’s the perfect way to celebrate the big dance with great company!
RSVP now and let’s get the brackets rolling! 🏀🍻