02/17/2023
Ever wonder why rates were so low in 2020?
It’s because inflation was also very low.
Inflation and interest rates move hand in hand. When inflation is high, rates are high and when inflation is low, rates are low.
In 2020 we saw people not wanting to spend money due to the uncertainty of the pandemic and being stuck at home. The Fed responded by lowering rates in hopes to get people to spend money.
With low rates, means more people wanting to buy homes because they can borrow money at such a low price. Real estate was POPPING OFF.
However, the supply couldn’t meet the demand. When demand outpaces supply, prices increase, aka INFLATION.
The economy got too hot and the Fed needed to do something about it.
In order to cool inflation, the fed raised rates over the past year to encourage people and companies to save more and spend less.
If/when inflation cools, you can expect mortgage rates to cool with it!
Be sure to like and follow for more mortgage content!
54 Likes, 23 Comments - Max Laychak () on Instagram: "Ever wonder why rates were so low in 2020? It’s because inflation was also very low. Inflation and interest rates move hand in hand. When inflation is high, rates are high and when inflation is low, rates are low. In 2020 we saw p...
