Pandora’s Box Indeed Has Been Opened: Inflation on the Rise

by Florida's #1 Mortgage Planner on August 4, 2008

I don’t have time to list all of the links to posts I have done warning of inflation’s rise since the Fed began cutting rates last year, so if you want to read them, please do a search or click the Fed Funds Rate category and browse away.

Nevertheless, I have warned for a very long time that inflation would begin climbing, even potentially getting out of control because the Fed will not do their job, rather focusing instead on bailing out every financial institution out there, almost anyway.  Today’s release of the Personal Consumption Expenditures (PCE) data revealed exactly what I warned you about.

Inflation, based on the PCE data climbed even at the core level.  Since this is the Fed’s favorite gauge on inflation, this should be the one you are most concerned with and not just CPI and PPI.  That Fed target of 1.5-2.0% that you have all likely heard of is in regards to the PCE data, not the others.

This morning showed two areas of concern.  The first is that the core PCE data revealed inflation climbed from 2.1% to 2.3%, distancing itself from the Fed’s target range.  The other is that overall inflation is up to 4.1%, the highest level of inflation in 27 years (1981).  Remember where mortgage rates went back then?  You better get off your butts and purchase that home or refinance it now before it is too late.

This doesn’t mean that mortgage rates are going to hit 18%, nor does it mean they will even break 10%, but it is a sign they will continue to rise.  And if you study the charts as I do, you can clearly see the patterns pointing in that direction.

There are still many whom feel that Florida home prices are far from the bottom.  Well, if mortgage rates (and inflation) are allowed to continue to climb, that may not be far from the truth.  Higher rates equate to higher monthly payments and that means qualifying for lower home prices.  If this happens, sellers may have to drop their prices to the level buyers qualify for, and that may be quite a discount even from today’s low home prices.

If you are looking to purchase a home, whether primary residence, second or vacation home, or even investment properties, I urge you not to wait and contact me today to review your options.  I can help you find the best financing deal for your situation, hands down.  And for those thinking of refinancing, stop sitting on the sidelines as rates may not make it worthwhile down the road.

Oh, and don’t think my services are just for homes of 4 or less units.  I do commercial loans as well and can help you find the most profitable deals out there, so give contact me today to schedule an appointment.

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