How Inflation Affects Mortgages Inflation influences nearly every corner of the economy — from food prices to borrowing costs. When inflation rises, money loses value and lenders increase interest rates to protect their investments. 🔹 Higher inflation = higher rates for new loans, reducing affordability. 🔹 Fixed-rate homeowners benefit, since their payment never changes. If your mortgage is fixed, inflation actually works in your favor. Your monthly payment stays the same while income and home values often rise. Over time, you’re paying back your loan with dollars worth less than when … Continue reading...
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Does the Fed Control Mortgage Rates? You might think when the Federal Reserve raises rates, it directly impacts mortgages. This is not the case. Why? Because the Fed can only control short-term rates such as credit cards and auto loans, not long-term rates such as mortgages. So, what does impact mortgage rates and why have mortgage rates stabilized since April 2022? The answer is the outlook for the economy and inflation. Fed rate hikes are intended to cool off inflation, slow economic growth, and slow down the labor market. They do this by raising the Fed Funds Rate. If … Continue reading...