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What Does Consumer Price Index & My Mortgage Rate Have In Common?

By Kevin Landis

Secrets of how the Consumer Price Index affects your Mortgage Rate. Tips to help you get more for your money.

Who would of thought that there is a common thread between the Consumer Price Index and your mortgage rate. We will look at how the Consumer Price Index affects mortgage rates and determine how to obtain the best rate.

So what is the Consumer Price Index?

In the simplest of forms it is an economic measurement that analyzes how much the average household spends in a given amount of time. The measurement is released on a constant basis (monthly, quarterly, and yearly). It is a very important economic measurement in determining the growth or decline of a country, and thus is very closely watched.

How does the Consumer Price Index affect mortgage rates?

The more the average household spends, the larger the Consumer Price Index value of a nation, and vice-versa. This is important because if the average household spends more, it is evident that they have more disposable income. The outcome is a growing economy. On the other hand, if the average household spends less, they have less disposable income. The outcome in turn is a recession. With a growing economy, the consumer will see rising house prices, and in turn a increasing mortgage rate. The mortgage rate will increase because the government as well as banks do not want high degrees of growth, which is also bad for the economy. If the opposite is true, the mortgage rate will decrease to attract people to buy houses.

So what does this all mean?

In order to acquire the best mortgage rate, look for times when the economy is slowing down and the Consumer Price Index has decreased from the previous release. Banks will decrease their mortgage rate during this period in order to attract new consumers and stimulate the economy.

Related posts:

1. Do Consumer Price Index & Mortgage Rates Conflict Each Other?
2. Does CPI Affect Mortgage Interest Rates?
3. Why You’re Probably Not Getting the Best Mortgage Rate Quote?
4. What Causes Changes In Mortgage Interest Rates?
5. What is the Average American Mortgage Loan Rate?