Modern Rustic Kitchen

The Impact of Inflation on Mortgage Rates

If you’re reading headlines about inflation or mortgage rates, you may see something about the recent decision from the Federal Reserve (the Fed). But what does it mean for you, the housing market, and your plans to buy a home? Here’s what you need to know.

Inflation and the Housing Market

While the Fed’s working hard to lower inflation, the latest data shows that, while the number has improved some, the inflation rate is still higher than the target (2%). That played a role in the Fed's decision to raise the Federal Funds Rate last week. As Bankrate explains:

Keeping its inflation-fighting streak alive, the Federal Reserve has raised interest rates for the 10th time in 10 meetings. The hikes aimed to cool an economy that was on fire after rebounding from the coronavirus recession of 2020.” 
While the Fed’s actions don’t directly dictate what happens with mortgage rates, their decisions do have an impact and contributed to the intentional cooldown in the housing market last year. 
 

How This Impacts You 

During times of high inflation, your everyday expenses go up. That means you’ve likely felt the pinch at the gas pump and in the grocery store. By raising the Federal Funds Rate, the Fed is actively trying to lower inflation. If the Fed is successful, it could also ultimately lead to lower mortgage rates and better homebuying affordability for you. That’s because when inflation is high, mortgage rates tend to be high. But, as inflation cools, experts say mortgage rates will likely fall.
 

Where Experts Think Mortgage Rates and Inflation Will Go from Here

Moving forward, both inflation and mortgage rates will continue to impact the housing market. And as Lawrence Yun, Chief Economist at the National Association of Realtors® (NAR), says:

Mortgage rates are likely to descend lower later in the year as the consumer price inflation calms down” 
Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), explains

“We continue to expect that mortgage rates will drift down over the course of the year as the economy slows"
While there’s no way to say with certainty where mortgage rates will go from here, the experts think mortgage rates will trend down this year if inflation comes down too. To stay informed on the latest insights, 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 and how it could impact your homeownership plans.
 

Bottom Line

Don’t let headlines about the latest decision from the Fed confuse you. Where mortgage rates go from here depends on what happens with inflation. If inflation cools, mortgage rates should tick down as a result. Let’s connect so you have expert insights on housing market changes and what they mean for you.

Recent Blog Posts

Six safety tips in the garden

With spring just around the corner, it's fun to start thinking about how you might revitalize your garden once the winter blues have been blown away.

Navigating Flooded Waters: Essential Steps for Dealing with Home Flooding

Facing a flooded home can be a daunting experience, but knowing what steps to take can help minimize damage and expedite recovery. Whether it's caused by heavy rains, … Read more

Rainy Days Ahead: Your Guide to Preparing for the Wet Weather Deluge!

As we brace ourselves for the rainy season, it's essential to equip ourselves with the knowledge and tools needed to navigate through the downpours. With days of rain … Read more

Essential Home Maintenance Tips for Southern California Living

Living in the beautiful region of Southern California comes with its perks—sunny weather, stunning landscapes, and a unique lifestyle. However, maintaining your home i… Read more

A Growing Family's Guide to Navigating Home

Your family is growing, and so are your needs when it comes to finding the perfect home. Whether you're expecting your first child or adding to your brood, finding a s… Read more

Finding Your Dream Home: A Guide for 55+ Homebuyers

Are you a seasoned individual looking for a new nest to call home? Whether you're downsizing, seeking a change of scenery, or simply ready for a new adventure, the jou… Read more

Unwind and De-Stress: Practical Tips for Managing Everyday Stress

In today's fast-paced world, stress seems like an inevitable companion in our lives. From work pressures to personal commitments, it's easy to feel overwhelmed. But wh… Read more

Navigating Retirement: Financial Tips and Lifestyle Choices for Individuals Over 50

As you approach the golden years of your life, there's a mix of anticipation and concern about retirement. It's a phase that demands careful planning and smart decisio… Read more

Finding Your Family Haven: A Realtor's Guide to Kid-Friendly Homes

Welcome to the world of parenthood, where every decision is made with your family's well-being in mind. As a seasoned realtor specializing in family homes, I understan… Read more

Work with Nelida

Providing clients with ultimate bespoke representation, customized marketing strategy, and a culture built on service. Excelling in exceeding expectations for buyers and sellers.