Logan Mohtashami on how mass federal firings could affect mortgage rates
Feb 21, 2025
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Logan Mohtashami, a lead analyst known for his insights on federal policy and mortgage rates, joins host Sarah Wheeler to discuss the potential impact of mass federal firings on the housing market. They delve into how these layoffs could lead to reduced mortgage rates and disrupt the labor supply in the sector. The conversation further explores the challenges the Federal Reserve faces in balancing inflation and unemployment, and how recent shifts in federal agencies may influence housing trends and affordability.
Mass federal firings are likely to slow housing market processes, causing significant delays in obtaining necessary documents and services.
The government's strategy to increase unemployment aims to lower aggregate demand, potentially contributing to a decrease in mortgage rates.
Deep dives
Impact of Federal Firings on Housing and Economy
The recent federal firings in Washington, D.C., particularly within agencies like HUD and CFPB, are likely to slow down processes crucial to the housing market, as the reduction in workforce can result in longer turnaround times for obtaining necessary documents and services. With many government functions at a standstill, such as CFPB operations, housing transactions may face delays, indicating a direct negative effect on the market's efficiency. While the firings alone won't significantly shift the overall economy, they will contribute to secondary impacts like reduced contracts and funding, which may ripple across various sectors. This could lead to a rise in unemployment beyond the immediate government sector as related private contracts dwindle, particularly affecting local economies tied to federal funding.
Federal Intentions and Economic Strategy
The federal government appears to be adopting a strategy aimed at increasing unemployment to lower aggregate demand, which could indirectly help in reducing mortgage rates. Officials have indicated a desire to create higher labor supply while managing lower overall demand, raising questions about the implications for the economy and the job market. This intended increase in unemployment is unprecedented as a public strategy, suggesting it may have been a deliberate move to stimulate economic shifts beneficial for housing. The interactions between these government policies and Federal Reserve responses will be critical to monitor, particularly how the Fed might react if unemployment surpasses their target rates.
The Housing Market and Government Control
There are increasing efforts to consolidate various independent agencies under the White House's control, allowing for clearer and more direct intervention in the housing market. This has raised concerns about the impact on monetary policy, specifically how such consolidations might affect banking regulations and the autonomy of the Federal Reserve. The housing market has been facing its lowest sales figures in four years, and presidential strategies tied to mortgage rates suggest an urgent need to address this crisis. As government influence on the housing market intensifies, the outcomes of these policies will shape economic trends, particularly how they affect consumer perceptions and lending practices going forward.
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about how mass firings at the federal level could lower mortgage rates.
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stories. Hosted and produced by the HousingWire Content Studio.
