VIDEO: Let's Talk Inflation
Mortgage interest rates are rising and inflation is one of the key contributors. So, what is inflation and how exactly does it affect mortgage interest rates?
Mortgage interest rates are certainly keeping lenders on their toes lately! They're up one day and down the next, but have backed off the highs we saw in mid-October. Who knew we'd get so excited about rates below 7%?
So why the roller coaster ride? Inflation is driving the Federal Reserve to push up short term interest rates to slow the economy. But if they push too hard and the economy continues to weaken, we'll be driven into recession. The current volatility in interest rates is being driven by fears of inflation one week, which drives interest rates higher. The following week, the greater fear is recession, which drives interest rates lower.
Which way will we go? After the Fed's meeting December 13 and 14, they'll release their Summary of Economic Projections. This summary will give us some idea of the Fed's expected future path for interest rates. Stay tuned!
You don't have to be able to read this chart to know that green is good!
