Inflation Data Was Both Positive and Misleading for Prospective Loan Applicants

Peoples Home Equity comments on Thursday, February 20th's inflation report.

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low inflation can have a misleading effect

Chicago, IL (PRWEB) February 21, 2014

The inflation report on Thursday, February 20th, was both positive and negative in the eyes of Peoples Home Equity.

The annual pace of inflation declined to its lowest level in over a year and a half, as shown on TradingEconomics.com. Economists had predicted approximately the same figure from December would show for January. Peoples Home Equity thinks low inflation can have a misleading effect. When individuals see prices declining, such as the cost of cereal or televisions, they think they have lots of time to make a purchase. However, the lender does not think this holds for home prices. Peoples Home Equity reminds readers, especially prospective mortgage applicants, that home prices have been increasing due to low inventories across the United States. Moreover, mortgage rates have continued to increase over the past year on fears that the Federal Reserve will further taper quantitate easing or directly increase the Fed funds' lending rate. Thus, despite a low inflation rate, mortgage rates may still rise. Unemployment is declining, leading to more people able to afford goods and services. Prices will not remain low forever. Demand for these goods and services will eventually outweigh supply and the market will see inflation turn around and trend upward, leading to higher mortgage rates! Mortgage rates have already increased 0.19 from their recent low of 4.28% on February 3rd. Thus, Peoples Home Equity thinks prospective mortgage applicants should get approved for a home loan now before it becomes less affordable in the future.

Please contact Peoples Home Equity loan officer today for mortgage details at: (855)-897-0300.