DOGE Take a Bite Out of Job Growth 🐶

Hello Everyone! It has been another busy week in the real estate and mortgage world, with fluctuating rates and new economic reports grabbing everyone’s attention.

Let’s dive into what’s happening and how it may impact your business!

Read time: ~4 minutes

Rates ended UP compared to last week, and volatility was LOW. Rates are in the high 6 range for most loan types without paying discount points. Paying discount points can get you in the low-to-mid 6’s.

DOGE Take a Bite Out of Job Growth 🐶

The latest jobs report for February was a letdown, with only 151,000 jobs added—short of the 160K forecast. At the same time, unemployment crept up from 4.0% to 4.1%, suggesting that the labor market’s cracks are getting harder to ignore.

A big factor here is the Department of Government Efficiency (DOGE) winding down federal employment. We saw a 10,000-job drop in the federal sector last month alone, and since there are still over 2 million federal workers, this may be just the start.

In addition, layoff announcements are extending beyond government roles. Challenger, Gray & Christmas, Inc. revealed that 172,017 people lost their jobs in February—a 245% spike from January, marking the highest monthly total since July 2020.

Interestingly, mortgage rates have dipped somewhat recently, which might reflect the market anticipating more labor market weakness ahead. Government hiring helped prop up the economy in 2024, but now that DOGE’s belt-tightening is in full swing—and no major job creators are on deck for 2025—unemployment could continue to climb.

Student Loans Resume 🎓 and Credit Scores Take a Hit 📉

For the last five years, student loans were on pause, which gave lenders some wiggle room to qualify buyers for bigger mortgages. But that grace period is officially gone.

As of last month, federal student loans have once again started reporting to credit bureaus—an unwelcome wake-up call for many borrowers. The Wall Street Journal says 22 million people are exiting forbearance, with 9.2 million already behind on payments. In some cases, missed payments have caused credit scores to plummet by up to 200 points.

Why Does It Matter for Homebuyers?

• Lower credit scores = higher mortgage interest rates.

• Higher student loan payments = lower purchasing power.

If you have clients who are pre-approved and have student loans, have them check in with their mortgage professional ASAP. Nobody wants to be under contract and find out their credit score isn’t quite what they though

Is There More Doom & Gloom on the Horizon? 😬

We’re already dealing with slow hiring, rising unemployment, and student loan woes dragging down credit scores, but there could be more bad news on the horizon.

Q1 GDP Revised WAY Down

GDP (Gross Domestic Product) is a crucial measure of our economy’s health. While the official number typically lags, the Federal Reserve Bank of Atlanta publishes a GDPNow forecast, and right now, it’s not pretty.

Even though the U.S. economy has seen positive GDP quarters since Q2 of 2022, Q1 and Q2 are historically the slowest periods of the year. Unfortunately, the Atlanta Fed just slashed their Q1 2025 estimate from +2.3% to -2.4%.

What does this Mean for Real Estate Professionals?

If the economy continues to weaken, mortgage rates may stay low or even dip further—which is great news for buyers hoping to keep monthly payments in check. On the flip side, lingering concerns about the broader downturn could dampen homebuying demand, and lenders could adopt stricter requirements. Sellers may also hold off on listing if they suspect prices could soften.

For real estate and mortgage professionals, it’s key to strike a balance between sharing the encouraging news about lower rates while offering pragmatic advice on the potential challenges of a weakening economy.

Two Ways My Team & I Can Help

1. Lets collaborate- Schedule a zoom meeting

2. Tough Deal? Let us know if we can help