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Inflation has been at the forefront of everyone’s mind for the past two years and its effects in real estate have been lit up like a neon sign. In fact, January 2022 saw a rise of 0.6 percent in the seasonally adjusted Consumer Price Index for All Urban Consumers and marked a rise of 7.2 percent (not seasonally adjusted) for the last 12 months. The highest rate of inflation in decades.

For homeowners looking to sell (and not buy another home) there was excitement. Sharp increases in property values, bidding wars, and ultimately the sale of their property for an amount that exceeded expectations. It was a win. Even property owners who rent out their homes didn’t find themselves too badly off, as they were able to ask more for their units. For everyone else? Not so great.

Prospective buyers had much to consider. How long would they own their potential new property? Would it be long enough to off-set the increased purchase price? Were they paying more than the property would ultimately be worth? Were we in a real estate bubble destined to pop that would result in a poor investment choice? Worst of all, buyers had to wonder if they could even compete in such a competitive market or if they had to hold out until their savings could catch up. Renters looking to move had to dig through homes listed at steeper prices and may not have had the wage increase to match.

How Is Inflation Impacting Mortgage Lending?

Property owners and prospective buyers aren’t the only ones affected either. Mortgage lenders are feeling the effects of inflation too. Sure, there are advantages like borrowers needing increases in their credit to keep up with high prices, which ultimately earns more interest for lenders. Or, when the economy is still growing despite inflation and interest rates are increased in an attempt to slow it down.

On the other hand, borrowers are paying their loans down with money that is worth less than when they first took out the loan. This is especially concerning when inflation is rising as quickly as we’re seeing it today. There’s also the worry that more borrowers will default on their loans or there will be a decline in those looking for a loan, and thus decreased business.

Has Your Team Seen These Effects?

If you’re looking to stay up to date on real time market insights for your area, The Warren Groups Mortgage MarketShare Module is for you. Accurately track lending patterns, benchmark your sales team productivity against that of the competition in todays ever-changing market, track historical ranking and trends, and a lot more. You can even access annual, quarterly, or monthly reports if an on-going subscription doesn’t suit your needs. Just reach out to a data specialist and ask them how data by The Warren Group can put you a step ahead of the competition.