Purpose
Refinance Purchase Home Equity

Loan Type
Fixed ARM Interest Only FHA

Amount

State
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

Display Mortgage Rates &
Refinance Rates in your State

Do Consumer Price Index & Mortgage Rates Conflict Each Other?

By Kevin Landis

If you are taking out a loan or trying to refinance your house on your mortgage, you may wonder if the consumer price index and the mortgage rates conflict with each other. The simple answer is that the rate of one is often connected to the other, but the two rates do not necessarily conflict. A homeowner’s mortgage rate can still go up while the consumer price index goes down and vice versa.

Understanding the Consumer Price Index

The consumer price index does not affect mortgages or mortgage rates. The statistic is a way of tracking inflation throughout all sectors of the economy, not just mortgage rates. A higher consumer price index may indict higher interest mortgage rates in general, but this is not always the case. The mortgage rate a homeowner receives is often tied into rates set by the federal reserve. The latter is only true for borrowers that have an adjustable rate mortgage. Fixed rate mortgages do not have the rate at which the money is lent interfered with in this way.

Why Might the Two Be in Opposition?

The consumer price index may cause the federal government to raise or lower interest rates depending on the desired level of economic activity. If the consumer price index has risen too quickly, the federal reserve will attempt to raise interest rates to lower the rate of borrowing. If the consumer price index drops, the federal reserve lowers rates to encourage borrowing. The examples in the previous sentences indicate general trends rather absolute trends. The two numbers may or may not be in conflict with each other depending on the economic conditions present at any given time. At the moment, the consumer price index and mortgage rates do not conflict with each other much.

Related posts:

1. What Does Consumer Price Index & My Mortgage Rate Have In Common?
2. Does CPI Affect Mortgage Interest Rates?
3. Does Inflation Affect Mortgage Interest Rates?
4. Inflation Affects Mortgage Interest Rates In What Ways?
5. Do Mortgage Interest Rates Move In Proportion To The Fed Rate?