April 14, 2026
There is no doubt that the war with Iran has caused damage to the economy. Higher mortgage rates and oil prices coupled with a falling stock market and waning consumer confidence represent a lousy combination. In addition, the government is now accelerating spending which is going to have a negative effect on the federal budget deficit in the long term. The good news is that many of these factors are temporary. There is a chance that as soon as the conflict is resolved, we may very well see a fairly rapid recovery within many of these segments of the economy.
The fragile ceasefire which started last week gave us an indication of the markets’ potential resiliency. Of course, the longer the conflict goes on, the longer the recovery is likely to take. Thus, we are all rooting for a conflict with a quick resolution. But at this point we can no longer label the timeframe as extremely brief. On the other hand, the timeframe is not yet considered protracted by any means. There is a big difference between a few months and years of fighting. If you look at the market’s reaction to the Ukraine war, there was a recovery which took place over time as the markets adjusted to the fact that the war was not spreading to other countries, even though it has continued for years.
Regarding the real estate sector, initially we have not seen major negative implications. Certainly, higher interest rates are not ever welcome within the sector. But when rates rise initially, this factor often tends to attract prospects that were waiting for mortgage rates to fall. The longer interest rates stay elevated, the more likely the market will be affected adversely. Obviously, the refinance spigot tends to turn off more quickly, which we have already seen. The purchase side of the market is one sector which has the potential to rebound quickly if mortgage rates come back down as the conflict abates. Let’s hope for a quicker resolution and a return to falling rates.
Source: Origination Pro
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