Inflation is Here.. What Does This Mean for Mortgage Rates?
Watch the original video: Inflation is Here. What Does This Mean for Mortgage Rates?
Here’s my Monthly Mortgage Market Update for May 2021. In this month’s video, I’ll share important updates on the First Time Homebuyer Tax Credit, rising inflation, mortgage interest rates, low inventory, and what this all means for the housing market. Watch the video above to learn more.
🏡 First Time Homebuyer Tax Credit
The Biden Administration has proposed a tax credit for up to $25,000 for first time homebuyers. This could have a problematic effect on the market. Right now we have a supply, demand, and an inventory problem. This tax credit option would increase the levels of demand without fixing the supply problem. If this is passed it could cause an even LARGER housing inventory shortage.
⚠️ Volatile Housing Market
What does the future hold for the housing market? Historically every seven to ten years we typically see a downturn in the market, and right now we are overdue for the typical downturn. However, our current market is showing no signs of slowing down, and will most likely continue to be hot through the rest of this year. All over the country we are seeing a shortage of inventory and a huge buyer demand. Combined with the construction industry lagging over the last couple years in building new homes and a lack of rental inventory as well. All of this is a recipe for a housing crisis. People are asking what are the alternatives? The answer is, we have to watch what happens with inflation.
⁉️ Inflation and Interest Rates
Historically interest rates are still low, however, at the beginning of January they did jump up by a whole percent. This is due to the inflation we are seeing right now. Everything from the cost of living to gas are on the rise. Inflation also causes mortgage interest rates to increase. To curb inflation the government will continue to push rates up, so for now we are predicting interest rates to continue to rise. We will keep you updated on any changes.
➡️ Inventory Update
Right now as many of you know, inventory has been extremely low. It is not just low in Shasta County, but all over the nation. However, there are rumors of national builders coming to Redding. This will change the dynamic of housing in Shasta County. These companies have the means to build quickly because they can rely on their own resources. We will keep you updated as more information comes out.
Thank you for all your continued support. Feel free to reach out. I am available, call, text or email me anytime.