Over the past 10 days, conforming Florida mortgage rates surged upward by as much as 1.125 percent, increasing the average cost of home ownership here in the US by thousands of dollars.
These increases in Florida mortgage interest rates may seem arbitrary to the casual observer. However, there is a reason this is happening, and it starts with inflation.
How Inflation Impacts Florida Mortgage Rates
Inflation is the enemy of all that is good with our economy. It demolishes the value of the U.S. Dollar and drives up the Cost of Living for every American as each dollar “buys less” at the supermarket, gas station, etc. This dollar value erosion factor happens gradually over time. However, with Florida mortgage rates, the impact is much more immediate.
Because inflation devalues the dollar over the long-term, it positions long-term mortgage bonds as much less advantageous investments for traders. You can see this more clearly in cases where investors in mortgage bonds are repaid in U.S. Dollars. You don’t have to be Warren Buffet to see that this type of investment would be worth much less if the dollar is in an inflationary free fall.
Lately, Wall Street is fearing inflation for a number of reasons:
- Job losses are slowing, a sign that consumer spending might increase
- Gas prices have increased 41 days in a row
- The federal government is upping the money supply
These 3 factors — along with several others — are all coming to a head at once - causing traders to become defensive with their portfolios. As a result, they’re selling their mortgage bond positions and it’s driving Florida mortgage rates higher.
Mortgage rates in Florida Rates are still very volatile. Interest rates may touch the 7 percent mark as we move into July and August, or they may move downward back toward 5 percent. We can’t know for sure.
What we can know is that there will be no end to the wild swings up and down until things begin to stabilize. This, of course, could be next week… or next year.
For now, be ready to lock at a moment’s notice. Florida mortgage rates are changing quickly.
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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Let’s hope rates stabilize soon without fed intervention, our market in Atlanta has been on the upswing recently and this is just the kind of thing that could send us spiraling down again. Keep up the great work!