What Affects Mortgage Rates? March 25, 2021

Interest rates on long term bonds are the result of inflation expectations as well as prospects of future GDP growth. All else equal, higher anticipated impending inflation raises interest rates, as does better projected economic growth. If long term bonds rise because markets anticipate strong growth, that is good as better growth, higher employment, and more investment, can more than compensate for higher interest rates. If, however, rates rise simply because of inflation, not good!