Inflation and Mortgage Rates

You may have seen headlines about mortgage rates or inflation, and you might also be aware of the recent Federal Reserve (the Fed) decision. What does this mean for you and the housing market? And what about your plans to purchase a home. Here’s what you should know.Inflation, Housing Market, and the FedWhile the Fed is working hard to reduce inflation, the most recent data shows that while the number has improved, the inflation rate remains higher than the target (2%) The Fed raised the Federal Funds rate last week as a result of this. Bankrate explains that the Fed has raised interest rates 10 times in 10 meetings to keep its streak of fighting inflation alive. . . The Fed’s actions do not directly influence mortgage rates but their decisions have an impact on the housing market and contributed to its intentional cooling down last year. Your everyday expenses will increase during times of high inflation. You’ve probably felt the pinch when you go to the gas station or the grocery store. The Fed actively tries to lower inflation by raising the Federal Funds Rate. If the Fed succeeds, it could lead to lower mortgages rates and better affordability for homebuyers. When inflation is high, so are mortgage rates. Where Experts Think Inflation and Mortgage Rates Will Go From HereMoving forward both inflation and mortgage rate will continue to have an impact on the housing market. Lawrence Yun, Chief economist at the National Association of Realtors says: “Mortgage rate will likely fall lower later in the calendar year as consumer price inflation slows down. . Mike Fratantoni explains that the Mortgage Bankers Association’s Chief Economist, Mike Fratantoni: “We continue expecting mortgage rates to drift downward over the course the year as the economic slowdown continues. . “While it’s impossible to predict with certainty where mortgage interest rates will go, experts believe that mortgage rates will continue to trend downwards this year if inflation also falls. Connect with a trusted advisor to stay up-to-date on the latest trends. They are always on top of the latest developments and can help you understand how the experts see the future and how that could affect your homeownership plans. Bottom LineDon’t be misled by headlines about the Fed’s latest decision. What happens with inflation will determine where mortgage rates are headed. Mortgage rates will drop if inflation slows down. You can get expert insight on the housing market and what it means for you by consulting a trusted real-estate professional.

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