What Will Inflation Do to Mortgage Rates?
Posted on | January 30, 2009 | 10 Comments
Many of you know that there is a good chance that we will see inflation, possibly hyperinflation, in the near future. With the money supply eventually increasing in the United States, what exactly will this do to mortgage rates?
We are currently living in a very unusual time. For the majority of the 2000′s the United States has seen low mortgage rates during a commodities bull market. This is something that is extremely hard to explain. In the early 1980′s, we saw extremely high inflation with the commodities boom, but we also saw mortgage rates in the upper teens. There has been a recent sign of deflation with the inflation percentage dropping from 5.6% to .09% in five short months, but for the majority of this decade that has not been the case. From 2002 to 2008, the United States has seen an inflation increase from 1.59% to 3.85%. While this is not extreme, it is still a sign of the possible inflation to come.
What the future holds is quite unpredictable at this time. The Federal Reserve Bank is going to do everything in their power to make sure that banks are getting money for “free” by keeping the Fed Funds Rate essential at 0%. The problem with this notion is that the banks are not lending money, they are hording it because there is absolutely no interest. It is likely that we will continue to see rates decline as the housing market does not show any signs of reviving. Is it possible that we will see hyper inflation with rates under 4%? What an interesting time in which we are living!
Related Articles:
Inflation is Coming…Where Should You Invest? Part I
Inflation is Coming…Where Should You Invest? Part II
Mortgage Modifications Hit Record in December; Should You Modify?
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January 31st, 2009 @ 4:19 am
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January 31st, 2009 @ 6:07 am
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February 11th, 2009 @ 8:24 am
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February 11th, 2009 @ 5:00 pm
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February 11th, 2009 @ 5:07 pm
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February 11th, 2009 @ 5:10 pm
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February 11th, 2009 @ 8:02 pm
[...] About the author Subprime Blogger is your mortgage news source on the internet. For information about the subprime mortgage market as well as weekly mortgage rate predictions, make sure to check out Subprime Blogger. It also offers the direction of mortgage rates including subprime rates. [...]
February 12th, 2009 @ 12:52 am
[...] About the author Subprime Blogger is your mortgage news source on the internet. For information about the subprime mortgage market as well as weekly mortgage rate predictions, make sure to check out Subprime Blogger. It also offers the direction of mortgage rates including subprime rates. [...]