Mortgage Volatility Amid Inflation Uncertainty

There’s an ongoing debate among investors and policy makers regarding the direction of future inflation rates. This uncertainty is creating volatility in the mortgage lending market.

On the one hand, some believe that a combination of pent-up consumer demand, successive stimulus measures and the impact of supply chain disruptions during the COVID-19 pandemic are creating a fertile ground for higher inflation rates, where price increases outpace wages and income.

While others concur with the above opinion, they believe that said inflationary pressures are temporary and will subside once the stimulus measures dry up and supply chain disruptions are resolved.

As such, there are conflicting messages about the future of interest rates and, by extension, mortgage rates.

Two recent reports highlight the volatility and confusion regarding the direction of mortgage rates.

On Thursday, June 17, 2021, Freddie Mac published the following average mortgage rates, showing a declining direction:

*30 Year Fixed: 2.93 percent
*15 Year Fixed: 2.24 percent
*5 Year Adjustable: 2.52 percent

However, on the very same day, Mortgage News Daily published the following average rates:

*30-Year Fixed: 3.25 percent,
*15-Year Fixed: 2.62 percent
*5-Year Adjustable: 2.29 percent

The direction of mortgage rates will probably have the biggest impact on home prices and determine the endurance of the current bullish housing market.

In the meantime, investors will need to closely monitor inflation news, track comments from the Fed and watch budgetary decisions made in Washington DC as they try to gauge the direction of the real estate market.