How Interest rates and Inflation are connected

Have you been keeping an eye on mortgage rates lately? If not, you may want to start because changes in inflation can greatly affect them.

Inflation is the general increase in prices for goods and services over time. When inflation goes up, the cost of borrowing money also goes up, which means that mortgage rates tend to increase as well. This can be a deterrent for potential home buyers because higher mortgage rates mean higher monthly payments.

On the flip side, when mortgage rates are low, demand for homes tends to be higher because people can afford to borrow more money at a lower cost. This can lead to an increase in home prices due to the increased demand.

So, as you can see, there is a close relationship between inflation, mortgage rates, and home buyer demand. It's important to keep an eye on these economic factors if you're thinking about buying a home or refinancing your mortgage.

Stay informed and happy house hunting!