Homebuyers could soon see relief in pricing as inflation slows
Inflation recently reached its lowest level for the first time in more than three years according to the U.S. Bureau of Labor and Statistics (BLS).
(InvestigateTV) — Michael Neal with the Urban Institute in Washington DC said consumers have seen inflation’s impact reflected in their bills: from groceries to utilities to even higher mortgage payments.
“When we’re thinking about inflation, we’re really thinking about prices but not just prices, but the change in prices,” Neal commented.
Changes in inflation impact the decisions made by the Federal Reserve, which basically has two mandates from Congress. One mandate is promoting maximum employment; the other is stabilizing prices in the U.S. economy.
Neal said the Fed is tasked with ensuring that inflation grows at a moderate pace that’s consistent with the broader economic growth. It also has to ensure that economic growth does not undermine the ability of households to buy the goods and services that they need.
The Fed’s decisions also impact homeowners.
“The most direct and intuitive way is that the fed is increasing interest rates in response to higher inflation. That could increase mortgage rates as well,” Neal said. “So, all of this suggest that yes, higher inflation could reduce your ability to save to buy a home. It could reduce affordability of the home itself. And it could increase the interest rate that you may have to pay when you may actually purchase that home.”
Neal says it’s critical for those looking for a home to work with a real estate agent.
“Continue to look to take in the information from multiple lending sites in terms of the properties that are out there,” he advised. “At the same time, you know, continuing to find ways to put down, down payments that can provide a bit more, a bit more equity.”
Current homeowners should look for opportunities to refinance if interest rates decline, Neal said. Especially if they’ve just purchased a home and have enough equity.
“I would certainly look at the option of a streamline refi, that allows you to kind of to go and get around a lot of the administrative and paperwork aspects associated with refinancing your loan” he suggested. “That could be a quicker way to actually be able to lock in interest rates, if they continue to fall.”
Those looking for keys to a new place or just moved in should remember to pay attention to inflation. It could end up saving or costing money.
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