If you Google “recession” today, you’ll find thousands of differing opinions about when (or even if) the US economy will slow down enough to enter a recession.

Recessions are a big deal for the housing market because they mean lower mortgage rates. My job as your mortgage advisor is to understand what economic factors are at play that will bring rates down so you can know when to get the most favorable terms on your home financing.

So, the question is: WHEN will we actually be in a recession?

Nobody can say for sure, but there are several things that have happened and are currently happening with the economy that make us think an economic downturn will be here very soon:

  1. Americans are saving less money than they were before the pandemic, and the amount of consumer debt is MUCH higher than it has been for years ($1.5 billion higher than it was before the pandemic). Credit card delinquencies have also increased.
  2. Short-term bonds are yielding higher returns than long-term bonds. This is called an Inverted Yield Curve, and every time it has happened a recession has followed without fail.
  3. Banks are tightening their standards for credit and loan approvals across the board.
  4. Student loan payments are resuming next month, which will have a significant impact on personal finances.
  5. A pending commercial real estate crisis, due to high interest rates and very high vacancy rates.

Remember, home values do NOT go down during recessions. The only time this happened was during the Great Recession in 2008, but that recession was caused by the housing bubble. Today’s housing market could not be more different.

Mortgage rates, on the other hand, DO always go down during recessions. You can learn more about why this happens by reading this blog article.

In the meantime, please don’t hesitate to reach out if you have any questions!

Ready to get started?  We’re here to help!

Tim Erickson
P: (652) 451-2273
E: tim.erickson@goluminate.com
W: www.TimEricksonMortgage.com

Mark Henderson
P: (651) 398-3477
E: mark.henderson@goluminate.com
W: www.MarkHendersonMortgage.com