Inflation Shouldn't Stop Your Dream of Homeownership

As mortgage rates continue to rise, the growing numbers are extremely frustrating to both potential homebuyers and lenders alike. After having unprecedented low rates over the previous years, we’ve all gotten used to much lower numbers, but due to inflation and other factors, that is no longer the case.

Luckily, inflation doesn’t mean it’s all doom and gloom—there are plenty of ways we can get creative with your finances to help you find your dream home in this unpredictable market. But what can we do, and how does inflation affect all we can do?

What is Inflation?

In the most generic of economic terms, inflation is what happens when the prices of goods and services go up in our economy. What this causes is a decline in purchasing power (or the value of currency), meaning your money won’t get you as much today as it would have “yesterday” before inflation hit.

As you can imagine, this affects everyone—borrowers and lenders alike! Lenders lose money to inflation from rising costs, and borrowers can only borrow less since their money won’t stretch as far. Lenders specifically make their money via mortgages, which means factors like inflation, geopolitics, and more can cause rates to rise. While lenders like Luminate try to limit the rise in rates as much as possible, most lenders' hands are tied and at the mercy of inflation, the federal government, and investors.

What Does Inflation Mean for Potential Homeowners?

If you are keeping track of rising rates and the news, you likely are hearing how much of a seller’s market we’re in or how expensive rates have gotten. While all of this is true, know that it won’t last forever.

Historically, we’re still in a good spot for 30-Year Fixed-Rate Mortgage Averages in the United States: