This video covers inflation, sometimes overlooked when it comes to it’s affect on mortgage rates. The video posted today on CNBC also touches on the Fed’s exit strategy. Inflation is an important element in forecasting mortgage rates. When mortgage rates sky rocket inflation fears often play a key role. We havn’t had much of an immediate threat in recent months, yet inflation fears have affected investors, mortgage bond prices and mortgage rates. The mindset of investors is extremely important when it comes to mortgage rates. Mortgage-backed securities drive mortgage in the opposite direction. When the dollar is weak investors might be driven away from MBS and into a more profitable investment therefore lowering demand pushing MBS prices down and rates up. The Fed’s exit strategy is important to U.S. homeowners. As they raise rates millions of home equity lines of credit will go from rates in the mid 3’s to possibly the 7’s, a dramatic increase.