After bottoming out at 2 month lows late last week, mortgage rates have been heading higher. At first, the move was relatively gradual, but the pace increased today after a key report on inflation came out much stronger than expected. Why do rates care about inflation? Here’s a quick explainer for those who need it: Mortgage rates are primarily determined by trading in the bond market. After all, bonds are essentially loans where the bond buyer is the lender/investor who fronts a lump sum and earns interest over time. Because those investors are realizing value based on payments over time, if inflation robs those future dollars of purchasing power, then the investor/lender’s decision to buy that bond is less profitable. If investors have reason to believe inflation will increase (or immediate

2021-05-12 17:25:46

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Courtesy of Mortgage News Daily

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