In the current economic climate, you’ve most likely been affected by inflation in the past few years. Inflation reflects how much more costly services and goods have become over a certain period of time. You’ll see inflation in the news when it spikes, especially on an annual level. As a consumer, you might see it affecting goods you purchase regularly, such as groceries. When you go to make a larger purchase, like a car or a home, inflation becomes even more evident.
Inflation can occur for many reasons in the market, sometimes specific to one type of market or good. For example, when avian influenza was rampant in 2023, the cost of eggs went up temporarily, disrupting the market for that specific good. As we’ve seen through the pandemic, the supply shortage of computer chips used in cars means there are less cars available, and the value of cars (including used vehicles) has increased.
You also know this is even tougher for a consumer to handle when their wages aren’t keeping pace with the increase in the costs of goods – and rent. Rent inflation is one reason people often consider homeownership – while they take on other burdens like property taxes and home repairs, they can access a monthly mortgage cost that stays the same.
Like eggs and cars, the real estate market has its own inflation and is also impacted by the general inflation we’re all experiencing.
The average daily mortgage interest rate for Wednesday, February 7, 2024 is 6.92% for a 30 year fixed rate. The rate fell 0.05% from yesterday and rose 0.24% from January 2024. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
Lenders in the freerateupdate.com network are currently offering rates as low as 5.9% (6.1% APR) on a 30-year fixed-rate mortgage. Receive a rate up to 1.02% lower than today’s average 30-year mortgage rate if you qualify. ⓘ
The average daily mortgage interest rate for Wednesday, February 7, 2024 is 6.27% for a 15 year fixed rate. The rate fell 0.04% from yesterday and rose 0.33% from January 2024. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.
Lenders in the freerateupdate.com network are currently offering rates as low as 4.9% (5.2% APR) on a 15-year fixed-rate mortgage. Receive a rate up to 1.28% lower than today’s average 15-year mortgage rate if you qualify. ⓘ
How inflation impacts average daily mortgage interest rates
The Federal Reserve is the central bank authority setting interest rates in the United States. The Fed considers inflation as a significant factor in raising or lowering rates, as it’s their job to control inflation. Generally, The Fed raises interest rates (which increases the cost of your loan) to cool inflation. Obviously, this makes it hard on a consumer like you – your salary raises may not match inflation, the cost of buying a home goes up, and until inflation cools, other costs (like rent) may continue to rise.
High inflation means higher interest rates, which is not an encouraging economic climate for homebuyers. However, the smart buyer will track the market and consider making moves at an appropriate time. If you know a rate hike is coming, you might want to consider applying for or refinancing a mortgage now; as long as its favorable to your financial situation. If you’re comfortable where you are and can continue to save for a down payment and offset the total cost of your loan, you could wait until the rates are more in your favor.