Inflation’s impact on the housing market

Everything happening in our economy today hinges on inflation. If inflation continues to fall quickly, robustly, and smoothly, we can expect the U.S. economy to rebound well. Consider it a softish landing, as the Fed continues to work on lowering inflation rates by raising interest rates. But if inflation refuses to come down as quickly as economists would like, that may put pressure on the Fed to continue raising rates—and keep them elevated longer. This would mean a slower economy ahead.

In this blog post, we’ll examine the current economic landscape, explore how it affects borrowers, and see what it means for lender mortgage portfolios.

Inflation is trending downward

Recent inflation readings have been moving in the right direction. There has been a downward trend from the 9.1% peak in June 2022 to 4.9% in April. While it is a significant drawdown, it stems primarily from “simple” economic fixes: commodity prices and other things that are easier and typically faster to react when monetary conditions tighten. However, progress has slowed considerably when we examine the core measures the government is taking to hinder inflation. We are now working from a position where reaching the 2% mark will be a slow grind.


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