This Week in Seattle Real Estate | The Public Square 2.23.23

The Public Square

The United States economy continues to produce mixed signals about whether or not the country is headed for a recession. This past week the Commerce Department reported that the United States’ gross domestic product (GDP) grew by 2.9% in Q4—only slightly higher than the 2.8% GDP prediction from investors. 

Yields on Treasury notes rose after the release of the report with the 10-year yield climbing 2 basis points to 3.485%. The yield on the 2-year Treasury note also increased, moving up by 3 basis points to 4.166%. The 10-year and 2-year yields have been inverted since June of 2022 which is typically a strong indicator of a recession. The labor market also continues to show resilience with jobless claims continuing to decline week-over-week. That is a sticking point for the Federal Reserve as it continues its quantitative tightening (QT) measures to try and reign in inflation. A strong labor market may indicate that QT measures are not working and need to be tightened even further. The Federal Open Market Committee (FOMC) is set to meet Jan. 31-Feb. 1 and investors expect another 25- or 50-basis point increase to the federal funds rate. Mortgage rates continued to trend down week-over-week, according to Freddie Mac’s latest 30-year fixed-rate mortgage average survey. Rates came in at 6.13%, just slightly lower than the week before. Freddie Mac economists noted that any downward trend in rates will support pent-up demand, saying in their report, “Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time homebuyers.” 

Keep in mind that the average you see from Freddie Mac is just that, an average. Interest rates are calculated based on a number of factors including your credit history, outstanding debt, type of loan you are applying for etc. That’s why it’s always best to discuss your options with a Movement Mortgage loan officer before you start shopping for a home so you can be fully prepared.

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Our Thoughts

Historical data reveals that during recessions, the mortgage rates actually decline. During the last 5 recessions, mortgage rates lowered on average of 1.8%.  The article above does provide a lot of good points as to why even if a recession comes, it will not affect the mortgage market in a drastic way. Mortgage rates are steadily favoring Buyers and it's great to see that a strong labor and mortgage market is to be expected this year. 

Although, it's always good to stay cautious, never underestimate uncertainty or "mixed-signals" as mentioned earlier. Feel free to contact us anytime, or you can also check out the following resources below to help with your research:
Buyer's Guide 2023
Best VA Mortgage Lenders
FHA Loans
How Do New Construction Loans Work? What Are The Requirements?
Loan Estimate Explained
Mortgage Calculator

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Compass is a licensed real estate broker. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.