This article covers the possibilities of rising inflation leading to higher mortgage rates. Inflation is the increase in the general price level or a decrease in the value of money over time. Mortgage rates are the annual interest rate of a home loan. The higher the mortgage rate, the more costly the loan is for buyers.
Presently, the current inflation rate is 2.3%, and the average mortgage rate is at 3.19%, indicating that mortgage rates are still relatively low. However, according to economists, this rate could rise steadily in the future with inflation. This is due to the Federal Reserve keeping inflation in check by increasing interest rates, which, in turn, affects the mortgage rates. Should the interest rates rise even further, it could lead to mortgage rates becoming significantly higher and more expensive.
It is important to note that there are other factors that can affect mortgage rates beyond inflation, such as the unemployment rate, wages, and consumer spending, which can lead to higher rates. Additionally, it is speculated by experts that a rapid jump in inflation could push mortgage rates over 7%. However, in a situation where the inflation rate remains steady, the mortgage rates are expected to stay at the current rate, or even dip lower.
Overall, the article suggests that mortgage rates could rise due to the Federal Reserve’s efforts to keep inflation in check. This could lead to higher rates, although the rate of increase depends on other factors. Although it is estimated that a rapid jump in inflation could cause mortgage rates to go over 7%, continued steady inflation levels would not have a huge effect on mortgage rates.
You can read this full article at: https://www.housingwire.com/articles/will-hotter-inflation-send-mortgage-rates-back-over-7/(subscription required)
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