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What Happens When Bernanke Says "Inflation" 55 Times In 5 Pages Of Text

When Ben Bernanke says 'inflation', mortgage rates suffer Mortgage rates are a big deal when you're buying a home.

With even the slighest uptick in rates, 30 years of mortgage payments can get substantially more expensive and one of the most substantial threats to mortgage rates is an economic event called inflation.

Inflation's influence on mortgage rates is so large that markets can get jarred on just the mention of it and that's exactly what happened Wednesday when Fed Chairman Ben Bernanke uttered "inflation" 55 times in a 5-page speech at Harvard.

The speech started at 2:45 P.M. ET and by 2:53 P.M., the damage was done.

Market players interpreted Bernanke's remarks to mean that inflation may be worse that previously expected and mortgage rates moved up by 0.125 percent, or $8 per $100,000 borrowed.

This equates to $2,880 in extra payments over 30 years.

If you're actively shopping for a home loan and rapid rate movements make you nervous, consider locking in your mortgage rate today; rates have been especially jumpy all year and don't look to smooth out anytime soon.

(Image courtesy: ABC News)

Posted by Tiffany Taylor on 06/05/2008 01:53 PM

Comments (7)

Post is included in group: Mortgage Financing, Market Data & Forecast
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Post is included in group: Mortgage Solutions
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7 Comments on What Happens When Bernanke Says "Inflation" 55 Times In 5 Pages Of Text

I heard rates we going to go up more yet this summer and maybe go back down toward the election.

06/05/2008 01:58 PM

by Chuck Carstensen (Re/max Associates Plus inc)

What an edgy market we have these days - just the slightest change and people are scrambling around to solidify their investments. These are the days I'm glad I don't work on Wall Street.

06/05/2008 02:02 PM

by January Financial

Does this seem like a replay from the past? For so long mortgage rates remained historically low and now that there is upward movement it does seem to hurl a wind of panic moving forward. But if you stop to think about it, we're still experiencing awesome mortgage rates and we have to get out there and encourage people to invest in real estate while the rates and the inventory are in the buyer's favor!

06/05/2008 02:19 PM

by Kathy Brown Sells Northern Colorado (RE/MAX Alliance)

Tiffany,

I think you hit the nail on the head. Inflation will explode this year unless gas prices take a nose dive....which I do not think will happen.

06/05/2008 02:28 PM

by Team DiMuria, Katy Texas Realtors (Prudential Gary Greene Realtors)

Good post. It will help people sitting on the fence make up their minds.

06/05/2008 02:32 PM

by Jimmy Collins, Knoxville Area Real Estate (Century 21 Select Properties)

I do not like the word inlfation. No I do not. Oh how I wish PAR would come down.

06/10/2008 04:36 PM

by Spokane Home Loan -- Casey Brischle -- Mortgage Professional (Bank of Whitman)

good post.....we have to worry about inflation going forward......cost of energy will tick down into consumer goods soon......fed should raise rates at year's end

06/11/2008 09:39 PM

by Bryan Flynn Central Mass and Worcester Mortgages (Wells Fargo Home Mortgage)

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