CPI Inflation, Interest Rates & Home Buying
SHOPPING FOR FOOD YESTERDAY for food my weekly costs for the same items have increased about 20%; at Home Depot the cost of metal products, like the mailbox I was going to buy, doubled, and the cost of gas at the pump everyone notices.
The Cost of Living Index, CPI, is complied from data almost three months old. It appears that inflation this year, as measured by CPI will be in the double digits. Mortgage interest rates historically must be 3% over the rate of inflation for mortgage lenders to make money on fixed rate loans, and of course non-fixed rate loans are indexed.
What all this means is higher mortgage interest rates in the near future. Probably just after the coming November election. Home buyers major cost is interest. The time to buy using a fixed rate loans is now, today.
It is entirely possible before Christmas mortgage interest could be over 10%. This will not do the housing recovery any good as sales will slow, again. What homeowners are going to learn is that home prices are tied to mortgage interest rates. As interest rates go up, home prices will go down.
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And there is another “solution” that “they” have come up with.
Downsizing the package! Tuna isn’t that much more expensive
per can…however, the can is several ounces lighter. Coffee
went from lb sized packages to 12 oz packages and now to
8 or 10 oz packages. Soon, we will be buying half gallons of
gas at the gas station! In Canada, for years and years, one obtains
a mortgage that is annually analyzed and the interest rate changed.
Rarely can one find a fixed-rate there. Munipulated masses….at the whim of whomever! And that’s the way it is on Saturday! Good to hear that you still can paint houses!
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