HOW DOES INFLATION AFFECT INTEREST RATES?

To give you an easy way to remember how inflation affect interest rates:

INTEREST RATES ARE THE BOAT THAT FLOATS ON THE SEA OF INFLATION.

What this means is if inflation figures go up, interest rates will go up with them. Another general rule of thumb: If the stock market is doing well, mortgage rates will do worse. What happens is when investors are putting their money into the stock market, they are pulling it out of the bond market, which drives rates. When they want a safer haven for their investments if the stock market is not doing well, they pull it out of stocks and put it in the bond market, which makes rates get better. This isn't always the case, but it's a safe indicator.

All I'm hearing out there is the buzz that inflation is looming, and rates are going to go up. That, in combination with the fact that there's JUST enough time to buy and get in on the possible $8,000 tax credit if you close on a purchase before 12/1 makes it a good itme to buy. Rates are low, you might qualify for the $8,000 and there's a nice supply of homes on the market.

Call me if you have any questions!