Inflation Worries Cause Mortgage Rates To Rise

Inflation Worries Cause Mortgage Rates to​ Rise
Inflation worries,​ lead by reports of​ a​ jump in​ consumer spending November along with a​ rise in​ inflation during the​ same period,​ have caused major lending institutions to​ raise their 30-Year mortgage rates to​ above 6 percent .​
the​ average rate rose to​ 6.17 percent in​ some markets,​ compared with less than 5.96 percent just three weeks ago.
Analysts points to​ the​ worry about inflation being a​ major factor in​ the​ rise of​ long-term bond yields over the​ past week,​ which has a​ direct effect on​ mortgage rates .​
Many of​ the​ same analysts are also predicting a​ major slowdown in​ consumer spending in​ the​ months to​ come as​ the​ worry over the​ housing market and credit markets persist.
Much of​ the​ reason that the​ housing market is​ in​ such a​ slump is​ due to​ the​ fact that sub-prime credit is​ becoming harder to​ obtain in​ many markets .​
This has led to​ a​ glut of​ housing on​ the​ market and is​ expected to​ worsen as​ the​ credit market continues to​ further pull back on​ the​ reigns of​ lending to​ at-risk individuals .​
Many credit analysts predict that further concerns over inflation and consumer debt will lead to​ even tighter credit standards being adopted by many of​ the​ major lenders.
Following almost five years of​ heavy activity in​ the​ housing market,​ a​ severe slump is​ now underway in​ all segments of​ the​ market .​
Sales have become weak and home prices have fallen substantially,​ with the​ largest decline in​ home sales in​ 12 years taking place in​ November .​
Home sales were down almost 9% since the​ same period last year,​ and an​ astounding 34.4% compared to​ 2018.
Further adding to​ the​ upwards pressure on​ mortgage rates are increasing concerns about foreign housing markets .​
the​ UK housing market fell for the​ second straight month in​ December,​ with housing prices falling 0.5% .​
This brought the​ annual growth rate down to​ around 4.8% which represents the​ weakest growth in​ almost two years .​
Housing and credit worries lead the​ Sterling to​ reach a​ new record low against the​ Euro in​ late December.
There is​ also growing concern in​ the​ UK that the​ country is​ also heading for a​ recession,​ a​ similar concern that is​ echoed in​ the​ US .​
Many analysts do not expect the​ housing crunch to​ ease in​ 2008 and are worried that the​ credit crisis taking place in​ the​ US could also have negative effects on​ the​ UK .​
While the​ sub-prime market is​ causing much of​ the​ downward pressure on​ the​ market in​ the​ US,​ affordability concerns are leading the​ UK housing market worries.
With the​ grown concern of​ the​ credit crunch in​ America and abroad,​ sales are not expected to​ rebound before 2009 .​
Meanwhile,​ mortgage issuers are trying to​ protect their financial assets and take on​ less risk which is​ leading to​ higher mortgage rates,​ especially for long-term loans .​
Given the​ current backlog of​ housing on​ the​ market,​ it​ would take 9.3 months to​ clear the​ glut from the​ pipeline according to​ industry experts.
Inflation Worries Cause Mortgage Rates To Rise Inflation Worries Cause Mortgage Rates To Rise Reviewed by Henda Yesti on July 01, 2018 Rating: 5

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