Mortgage Rates Begin New Year Under Pressure

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Posted To: Mortgage Rate Watch

Mortgage rates are theoretically supposed to go higher in 2018. Any upward pressure on economic growth or inflation (courtesy of the tax bill, perhaps?) is bad for rates, all things being equal. Economic growth increases market returns, forcing rates to move higher in order to keep up. Inflation erodes the value of bonds that underlie rates, meaning investors want higher rates of return if they’re going to buy into the “fixed income” (aka “bond”) market. To be fair, this has been the expectation for several years now, depending whom you ask, but the inflation bogeyman has yet to materialize. Additionally, bond market investors haven’t seemed too troubled by the pace of economic growth. That’s allowed for outright defiance of the average prediction, which has generally called for much higher…(read more)

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