- Inflation affects mortgage rates; generally, higher inflation leads to higher mortgage rates.
- Commodity prices in April saw their biggest 12-month rise in nearly 13 years.
- But this is a temporary spike in inflation, so you don’t have to worry about rate hikes.
- See A Selection Of The Best Mortgage Lenders Insider “
Last Wednesday, the US Bureau of Labor Statistics released Consumer price index for April 2021. The CPI tracks the value of goods and services such as food, clothing, electricity, and cars. CPI is one of the measurement tools inflation in the USA…
The CPI showed that the cost of goods and services has increased by 4.9% since April last year. This is the largest annual growth since September 2008 – almost 13 years ago.
Prices have also risen 0.8% since March, although they were expected to rise by only 0.2%.
Inflation often affects mortgage rates. When inflation and employment are high, the economy is doing well. And mortgage rates go up when the economy is strong.
So, is it worth worrying about the imminent increase in mortgage rates due to high inflation? Probably no.
Why won’t mortgage rates rise due to high inflation?
Mortgage rates should not rise sharply until inflation stays high for a relatively long period of time, perhaps months.
High April Inflation Likely just temporary, not in trend.
USA see prices in April are higher than in March as new locations open up and demand for goods grows. But once that becomes the norm, when establishments reopen, supply should catch up with demand.
Before the 2020 pandemic, inflation was relatively low. So the April spike looks dramatic by comparison – which is why the numbers are much higher than 12 months ago.
Until there are prolonged periods of high inflation in the US, mortgage rates should remain low…
Mortgage rates this week
All mortgage rates have gone up since last week, but you have nothing to worry about. Most of the rallies are relatively small and are probably not a sign of long-term significant surges.
Refinancing rates this week
Refinancing rates also rose this week. Some refinancing rates have risen since last month, while others have declined. Refinancing rates are generally still low.
Mortgage and refinancing rates by state
Check out the latest rates in your state using the links below.
about the author
Laura Grace Tarpley is editor of Personal Finance Insider covering mortgages, refinancing and lending. She is also a Certified Personal Finance Faculty (CEPF). During her five years in personal finance, she has written extensively about ways to handle loans.