Inflation is up. When will interest rates go up? 2021-06-16
Gulf Coast Real Estate Update
June 15th, 2021
Inflation is up. When will rates go up?
Last week, the government reported that inflation jumped to 5% in May compared with a year earlier – the largest 12-month spike since 2008. The 30-year fixed-rate mortgage averaged 2.96% for the week ending June 10, according to Freddie Mac’s weekly report – down three basis points from the previous week. In general, when interest rates are low, the economy grows and inflation increases. Conversely, when interest rates are high, the economy slows and inflation decreases.
The economy is recovering remarkably fast and as pandemic restrictions continue to lift, economic growth will remain strong over the coming months. Despite the stronger economy, the housing market is experiencing a slowdown in purchase application activity due to modestly higher mortgage rates. However, it has yet to translate into a weaker home price trajectory because the shortage of inventory continues to cause pricing to remain elevated.
