As inflation rises, it typically causes mortgage rates to move higher as well. That’s because inflation is the arch enemy of interest rates, since it erodes the buying power of the fixed return that a mortgage holder receives.
While inflation may look tame to everyone at this time, it’s my job to dig deeper for you. A look at the closely watched “Consumer Price Index Core Rate” of inflation, which strips out the volatile food and energy sectors, shows a current reading of just 1.3% inflation for the past 12 months. This has helped interest rates remain low.
But in the coming months, the inflation levels are expected to rise significantly, as the readings for the more current months replace the extremely low numbers from 2020. It’s quite possible to see the rate of inflation rise towards 2.5%. It’s likely that this will influence interest rates to higher levels.
The good news is that inflation is likely to become more tame later this year. So now may be a great time for you to take advantage of the low-rate environment before these inflation readings start to move higher.
I’m Christopher Graves, your certified mortgage advisor, contact me at 978-376-5389, to get started before things change.
