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This guide explores the relationship between inflation and mortgage rates. It aims to provide you with a comprehensive understanding of how these economic variables interact and the implications for your mortgage and financial planning.
Inflation is the rate at which the general level of prices for goods and services is rising, effectively eroding purchasing power. Central banks attempt to limit inflation-and avoid deflation-to keep the economy running smoothly.
Higher inflation usually leads to higher mortgage rates. When inflation rises, the purchasing power of the dollar falls, and lenders demand higher interest rates as compensation. Conversely, lower inflation leads to lower mortgage rates.
Understanding the relationship between inflation and mortgage rates is essential in financial planning. Utilize our suite of iCalculator™ Mortgages tools to help navigate these complex financial decisions and make the best choices for your situation.