Will inflation affect mortgage interest rates? May 2, 2018

Despite being on its heels for ages, inflation is strengthening. Year over year economy-wide inflation ticked up to 1.85% in Quarter 1 of 2018, a hairsbreadth away from its four-year peak of 1.96% registered in Quarter 1 of 2017. In addition, it’s meaningfully declined only once since Quarter 3 of 2015. Relatedly, total year over year employee compensation, which includes wages, salaries, and benefits, grew at 2.7% in Quarter 1 of 2018, its highest rate since Quarter 3 of 2008, and it too has almost steadily risen since Quarter 3 of 2015.? Inflation is the nemesis of mortgage interest rates.? When inflation rears it’s ugly head, the Federal Reserve reacts by raising it’s borrowing rate.? That in turn will usually drive mortgage rates higher.? If inflation continues to strengthen, plan on higher mortgage interest rates.