How an Expert Can Help You Understand Inflation & Mortgage Rates

<article class="post-471963 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-471963"><span class="entry-date">September 27, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">How an Expert Can Help You Understand Inflation &amp; Mortgage Rates</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=How+an+Expert+Can+Help+You+Understand+Inflation+%26amp%3B+Mortgage+Rates&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fhow-an-expert-can-help-you-understand-inflation-mortgage-rates%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="How an Expert Can Help You Understand Inflation &amp; Mortgage Rates | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123142/202209207-KCM-Share-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123142/202209207-KCM-Share-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123142/202209207-KCM-Share.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>If you’re following today’s housing market, you know two of the top issues consumers face are inflation and mortgage rates. Let’s take a look at each one.<span id="more-47214"></span></p>
<h4><strong>Inflation </strong><strong>and the Housing Market</strong></h4>
<p>This year, <a href="https://www.simplifyingthemarket.com/2022/05/20/dont-let-rising-inflation-delay-your-homeownership-plans-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2">inflation</a> reached a high not seen in <a href="https://www.cnbc.com/2022/06/10/consumer-price-index-may-2022.html">forty years</a>. For the average consumer, you probably felt the pinch at the gas pump and in the grocery store. It may have even impacted your ability to save money to buy a home.</p>
<p>While the<em> Federal Reserve</em> is working hard to lower inflation, the <a href="https://www.nar.realtor/blogs/economists-outlook/instant-reaction-consumer-price-index-september-13-2022">August data</a> shows the inflation rate was still higher than expected. This news impacted the stock market and fueled conversations about a recession. It also played a role in the <em>Federal Reserve’s</em> decision to raise the Federal Funds Rate last week. As <em>Bankrate </em><a href="https://www.bankrate.com/real-estate/how-fed-rate-hike-affects-housing/">says</a>:</p>
<blockquote>
<p><strong><em>“. . .</em></strong><em> <strong>the Fed has raised rates again, announcing yet another three-quarter-point hike on September 21 . . . The hikes are designed to cool an economy that has been on fire. . .”</strong></em></p>
</blockquote>
<p>While their actions don’t directly dictate what happens with mortgage rates, their decisions have contributed to the intentional cooldown in the housing market. A recent article from <em>Fortune </em><a href="https://fortune.com/2022/08/15/falling-home-prices-to-hit-these-housing-markets-in-2023-and-2024/">explains</a>:</p>
<blockquote>
<p><em>“As the Federal Reserve moved into inflation-fighting mode, financial markets quickly put upward pressure on mortgage rates. <strong>Those elevated mortgage rates . . . coupled with sky-high home prices, threw cold water onto the housing boom.”</strong></em></p>
</blockquote>
<h4><strong>The Impact on Rising Mortgage Rates</strong></h4>
<p>Over the past few months, mortgage rates have fluctuated in light of growing economic pressures. Most recently, the average 30-year fixed <a href="http://www.freddiemac.com/pmms/pmms_archives.html">mortgage rate</a> according to <em>Freddie Mac</em> ticked above 6% for the first time in well over a decade (<em>see graph below</em>):</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123143/20220927-MEM-Eng-1.png"><img alt="How an Expert Can Help You Understand Inflation &amp; Mortgage Rates | Simplifying The Market" class="aligncenter wp-image-47216" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123143/20220927-MEM-Eng-1.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123143/20220927-MEM-Eng-1.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/09/26123143/20220927-MEM-Eng-1-400×300.png 400w" width="650"/></a></p>
<p>The mortgage rate increases this year are the big reason <a href="https://www.simplifyingthemarket.com/2022/09/19/will-my-house-still-sell-in-todays-market/?a=712984-fa409495d5d70154d03a25e81e9540e2">buyer demand</a> has pulled back in recent months. Basically, as rates (and home prices) rose, so did the cost of buying a home. That pushed on <a href="https://www.simplifyingthemarket.com/2022/09/13/three-things-buyers-can-do-in-todays-housing-market/?a=712984-fa409495d5d70154d03a25e81e9540e2">affordability</a> and priced some buyers out of the market, so home sales slowed and the <a href="https://www.simplifyingthemarket.com/2022/08/25/why-you-may-want-to-start-your-home-search-today/?a=712984-fa409495d5d70154d03a25e81e9540e2">inventory</a> of homes for sale grew as a result.</p>
<h4><strong>Where Experts Say Rates and Inflation Will Go from Here</strong></h4>
<p>Moving forward, both of these factors will continue to impact the housing market. A <a href="https://www.cnet.com/personal-finance/mortgages/mortgage-rates-on-sep-26-2022-rates-tick-up/">recent article</a> from <em>CNET</em> puts the relationship between inflation and mortgage rates in simple terms:</p>
<blockquote>
<p><em>“As a general rule, when inflation is low, mortgage rates tend to be lower. <strong>When inflation is high, rates tend to be higher.”</strong></em></p>
</blockquote>
<p>Sam Khater, Chief Economist at <em>Freddie Mac</em>, has this to <a href="https://freddiemac.gcs-web.com/node/25711/pdf">say</a> about where rates may go from here:</p>
<blockquote>
<p><em>“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth. <strong>The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, . . </strong>.” </em></p>
</blockquote>
<p>While there’s no way to say with certainty where mortgage rates will go from here, there is something you can do to stay informed, and that’s connect with a trusted real estate advisor. They keep their pulse on what’s happening today and help you understand what the experts are projecting. They can provide you with the <a href="https://www.simplifyingthemarket.com/2022/08/29/a-trusted-real-estate-advisor-provides-expert-advice/?a=712984-fa409495d5d70154d03a25e81e9540e2">best advice</a> possible.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Rising inflation and higher mortgage rates have had a clear impact on housing. For expert insights on the latest trends in the housing market and what they mean for you, let’s connect.</p>
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