Mortgage Rates Rise Just a Bit More Ahead of Important Inflation Data

Mortgage Rates Rise Just a Bit More Ahead of Important Inflation Data

Mortgage rates rose at their fastest pace in decades in 2022 and if only one thing could take the blame, it would be inflation.  There are several ways to link inflation to upward pressure on rates, but the simplest is to consider that rates are based on bonds and inflation lowers the value of bonds. In other words, if you are an investor who buys mortgages, you might be willing to accept a 6.5% rate of return today.  Now let's say inflation skyrockets.  If you still charge 6.5%, the payments you receive will buy a lot less "stuff."  So you have to increase your rates in order to get the same financial benefit. Because of the inflation focus, the biggest inflation reports have been closely-watched indicator for rate momentum for more than a year now.  None are bigger than the Cons