One of the biggest reasons why the housing market boom may continue is because of real mortgage rates. Right now we have seen the fixed mortgage rate jump from 3.1% to 5.25% in the time period between December to April which is basically unheard of. The real mortgage number even went negative for the first time since the 1970s back in January. We are currently going through an era where the real rates on mortgages aren’t just a negative but a major one.
- Since the beginning of 2021, mortgage rates have almost doubled, with inflation increasing at an even faster rate.
- Potential homebuyers need to look at how much they will pay each month compared to the inflation trend, not just at the raw number.
- For the past 30 plus years, the rate of home loans has been greater than inflation by an average of 3.6 points.
“Indeed, we’ve just witnessed a sudden, a giant chasm open between mortgage rates and inflation that’s put the distance and direction separating the two in virtually uncharted territory.”
Read more: https://fortune.com/2022/04/26/mortgage-rates-just-turned-negative-when-adjusted-for-inflation-and-that-could-keep-powering-the-housing-boom/
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