Inflation and Mortgage Rates
Mortgage rates have shown trends of going down over the past few years, but recently they have been rising. The pandemic marked a time when housing was a bit unstable, but now times are changing. For the past year, homeowners and buyers saw mortgage rates tumble to historic lows. Unfortunately, it looks like this incredible real estate trend is coming to an end. Inflation is now running rampant and the Federal Reserve must take action to get it under control, which means interest rate increases. All indications are that mortgage rates are going to start rising and will continue to rise through the end of this year. The team at Peoples Choice Mortgage is here to give you the data regarding mortgage rates, inflation, and what it means for homeowners and home buyers.
Mortgage Rates Are on the Rise
Mortgage rates are expected to rise as we head into the middle of this year. This is mostly thanks to the economy recovering from the novel Coronavirus. The rising has already happened as we are currently in an 18-month high of mortgage rate increases. Mortgage rates have been continuously increasing. These increases are expected to happen. Alongside inflation, experts have predicted that inflation would be one of the biggest factors influencing rising mortgage rates. Fears of inflation mean interest rates will increase several more times.
2021 was a time when mortgage rates were slowly increasing but still hovering at historic lows. Mortgage rates were also lower because investors were worried about the pandemic and its effect on the housing market. These worries made sense because the future of living was uncertain. However, the world is starting to return to normalcy. Jobs are now switching back to in-person, and people have to commute to more places. This has caused confidence in the market which has led investors to invest more. The end result is higher mortgage rates that do not seem to be going down any time soon.
Now, we are living in the reality of rising mortgage rates. The latest data by Freddie Mac tells us that the 30-year fixed-rate average crept higher. While rates are on the rise, there is nothing to worry about. Mortgage rates fluctuate, but if we look at larger historical trends we see that mortgage rates have been exponentially worse.
Inflation Is At Record-Breaking Levels
Inflation in the past few months has been rapid. The cost of many products has vastly increased. The Bureau of Labor Statistics reported that the Consumer Price Index (a tool to measure inflation) rose by 0.8% in February. This is the highest it has been in 40 years. Inflation is caused by a hot economy, where people are paying more because there is a higher demand for a product. In March, the inflation rate was a whoppping
Homebuyers should be aware that inflation will continuously cause mortgage rates to increase. The federal reserve will increase interest rates to keep up with the economy. It’s expected that interest rates will hike again in the near future as well. With the value of homes rising because of inflation, it’s best to buy a home as soon as possible. We do not know if we are at peak inflation or if it will get worse. The safest option is to get your home as soon as possible so that you can avoid paying more in mortgage rates.
Mortgage Rates, Homeowners, and Home Buyers
Low mortgage rates are great for homeowners and homebuyers alike. Lower mortgage rates can save you money on monthly payments. They can also save you tens of thousands of dollars over the life of your mortgage. For this reason, when rates are low, people want to buy homes. At the same time, when rates are low, homeowners want to refinance their existing mortgage at lower rates. You should absolutely take advantage of this market if you can. Changes in the future rate will require you to reassess how you budget, which can result in not getting your dream home.
Final Thoughts
Inflation has led to an increase in mortgage rates in the real estate market. Even small increases in mortgage rates can add up to thousands of dollars. If you are thinking of buying a home or refinancing your current mortgage, it is best to act now. Delaying your decision can cost you the opportunity to get lower monthly payments and big savings over the life of your home loan. If you want to buy a house, do it as soon as possible to lock in the best possible mortgage rates. Inflation could raise the value of your home so that it is worth more in the future, so you only do a disservice to yourself by waiting.
The best thing you can do is contact us and try one of our complimentary mortgage qualifiers. This will tell you exactly how close you are to buying a home of your own. However, if you do not qualify for a mortgage today, there is no need to fret. At Peoples Choice Mortgage we believe that everyone deserves the right to own a home. Just because you do not qualify today, it does not mean that you cannot qualify in the future. Based on what we learn about your financial situation from our complimentary mortgage qualifier, we can help you. We will craft a plan that will put you on a path to homeownership. Contact us today so that we can help make your dream of owning a home a reality.
