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Does CPI Affect Mortgage Interest Rates?

By Bob Redtree

There is no question that the CPI has some impact on interest rates.

The Chairman of the Federal Reserve often cites the Consumer Price Index in his public statements as he references reasons as to why he decides to raise or lower interest rates. The fact of the matter is that the Consumer Price Index is often closely related to people and the struggles they feel under inflationary pressure. Businesses also look at the CPI and if people are unwilling to buy their products at the moment, they are unlikely to expand or create new opportunities with their commercial properties. The fact that businesses don’t move has another negative impact on the economy.

Impact of the CPI

Does CPI Affect Mortgage Interest Rates? Sure, if consumers are uneasy about buying things like homes because they are unable to pay back the loan, of course this has an impact on interest rates. The interest rates attached to loans are likely to increase because banks want to protect their investments by trying to make as much money as possible.

Critics of the Federal Reserve

Does CPI Affect Mortgage Interest Rates? There are a lot of people who would prefer the Consumer Price Index not to have as much of an impact as it does because the CPI is often referenced by the Federal Reserve and there are a lot of critics of the Federal Reserve out there.

Bond Rates

The CPI is not the biggest factor when it comes to mortgage rates for your property, the biggest is a ten year bond yield. There are several business magazines who say that bonds are the only factor involved in the determining of mortgage rates, but this is factually inaccurate. Does CPI Affect Mortgage Interest Rates? The Consumer Price Index certainly does play a role because of the emphasis the Fed places on it.

Related posts:

1. Do Consumer Price Index & Mortgage Rates Conflict Each Other?
2. Does The Prime Rate Affect Mortgage Rates?
3. How Does Inflation Affect Mortgage Interest Rates?
4. How Will Hyper Inflation Affect Mortgage Interest Rates?
5. Do Federal Deficits Affect Mortgage Interest Rates?

2 Responses to “Does CPI Affect Mortgage Interest Rates?”

1. Lucius Eun says:

   April 2, 2010 at 2:02 am

   Thanks for the post. I want more!
2. Lacy Rickerson says:

   April 2, 2010 at 2:07 am

   Thanks for the post. I want more!