For Clues About the Future of Mortgage Rates, Watch For Inflation
By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Homes are more affordable across the nation as the housing market emerges from a slow winter season with mortgage rates still near 5 percent. Soft housing and low rates are an excellent combination for home buyers but whereas home values rise with a gradual pace, mortgage rates change in an instant. It's something worth watching. Each 0.25% increase to conventional or FHA rates adds approximately $16 per month for each $100,000 borrowed. Mortgage rate volatility can change your household budget. If you're trying to gauge whether rates will be rising or falling, one keyword for which to listen is "inflation". Mortgage rates are highly responsive to inflation. By definition, inflation is when a currency loses its value; when what used to cost $2.00 now costs $2.15. As consumers, we perce...