Friday, July 22, 2022 / by Laura Larson
Greg McBride, Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market: “Inflation will have a strong influence on where mortgage rates go in the months ahead... Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”
Since it is unclear how long it will take to control inflation, it is also uncertain how mortgage rates will develop in the future. Here are some instances of why both inflation and mortgage rates are crucial for you and your housing ambitions, despite how uncomfortable that uncertainty might be.
Mortgage rates and housing prices are important factors when purchasing a home. Higher mortgage rates have an effect on your monthly payment amount, which has an impact on how much you can comfortably afford. Furthermore, even while it is undeniably more expensive to purchase and finance a home this year than it was last year, this does not imply you should stop looking. This is why.
Owning a home has historically been a fantastic inflation hedge
Also, no one is calling for homes to lose value. As Selma Hepp, Deputy Chief Economist at CoreLogic, says: “The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”.
In summary, you don't have to put off looking for a property because of growing inflation or increased mortgage rates. There are many good reasons to buy a home right now, including meeting your changing circumstances, demands, aspirations and so much more, in addition to protecting yourself from the effects of inflation and increasing your wealth through continued price appreciation.
Homeownership is one of the best decisions you can make in an inflationary economy. You get the benefit of the added security of owning your home at a time when experts are forecasting prices to continue to rise. If you are contemplating buying a home and want to learn more about this changing market, contact Laura Larson to start the process with a true professional.