Rates Rise on Fear of Inflation

Mortgage rates experienced tremendous upward pressure this week as oil prices surged and various Fed members vocalized seemingly unanimous concern over inflation. Inflation is negative for mortgage bond prices, which ultimately impact the rates buyers will receive. While rates are at the highest levels seen since October 2007, we tend to get spoiled quickly. Current rates are still low historically, so buyers should not be discouraged from moving forward with the purchase of a new home. It is also important to note that current rates are exactly what they were just 8 months ago. The intervening 8 months saw a tremendous decrease in rates, as low as 5.375%, and it could happen again if oil prices start to retreat.