June 22, 2021
Real Estate

Inflation Is Back: But Does That Mean Mortgage Rates Will Rise?

During the past four decades, through protracted wars, hard-fought elections and economic booms and busts, American consumers could count on this constant: The rate of inflation remained below the average rate of a 30-year mortgage.

That changed last month. The pace of inflation in the United States jumped to 4.2 percent, according to the U.S. Bureau of Labor Statistics. The typical 30-year mortgage, on the other hand, costs a bit more than 3 percent.

That marked the first time since August 1980 that American inflation was running hotter than mortgage rates. That summer was the pit of the stagflation era, and it came just before the Federal Reserve embarked on an aggressive strategy to tame runaway inflation — a measure that neared a crippling 15 percent federal funds rate during the last gasp of the Jimmy Carter administration.

While the rate of inflation doesn’t determine…

Read full article here: www.bankrate.com