Inflation Impacting Mortgage Rates

Rising inflation is a concern for most Americans and impacts every sector of the economy. All financial decisions must be made considering inflation, especially when it has reached a 40-year high. So, what is inflation? Inflation is a general increase in prices and a decline in the purchasing value of money.

Inflation might seem to be an alarming term for many real estate investors. Fortunately, real estate is historically and arguably the best inflation hedge in any asset class.

Homeowners

For multiple reasons, inflation can be a positive opportunity for homeowners. Properties usually appreciate along with higher inflation and an increase in equity over time. Historically, home prices have increased in relative correlation with inflation. Home prices appreciate, but a fixed-rate mortgage payment remains the same.

Current investors

Real estate investment is one of the best opportunities, especially in this economic environment. Real estate ownership is a hedge against inflation as home values typically increase more rapidly than inflation.

While inflation is sure to impact the market and buying power, it is important to keep in mind that while mortgage rates have started to increase, they are still historically low.

As the raw materials used to build homes increase in price new home prices will continue to grow putting additional upward pressure on older home prices. Rents usually increase at a higher rate than inflation as well.

What’s next

It is imperative that homeowners and real estate investors compare their current situation to the future and not the past. A mere six months ago, rates were lower and home prices were lower. However, few if any prognosticators predict lower home prices or even lower rates in the next six months or two years from now. It is more probable that in the future homes will be more expensive, and rates will be higher. That means, despite the pain of what could have been, investing in real estate today should be a wise move.

If you are uncertain about the current real estate market, it is essential to stay in close contact with your lender. At Catalyst, we provide fully licensed loan officers, are active investors ourselves, and take pride in being a trusted advisor for our clients. We even have DSCR No Income Doc Loans!

If you are kicking yourself now for not investing a year ago, imagine how you will feel in a year from now. Call us today to see what innovative products we offer to help you make the best of your investment.

Make the Investment Today

While mortgage rates have started to increase, they are still historically low! The team at Catalyst wants to help you succeed. Contact us today or fill out a loan application. We’ll help you develop a plan and provide the financing you need to achieve your goals and accelerate your cash flow.