{"id":9388,"date":"2021-12-05T12:39:12","date_gmt":"2021-12-05T12:39:12","guid":{"rendered":"https:\/\/www.canadianrealestatemagazine.ca\/do-mortgage-rates-go-up-with-inflation\/"},"modified":"2023-10-24T04:23:04","modified_gmt":"2023-10-24T04:23:04","slug":"do-mortgage-rates-go-up-with-inflation","status":"publish","type":"post","link":"https:\/\/www.canadianrealestatemagazine.ca\/expert-advice\/do-mortgage-rates-go-up-with-inflation\/","title":{"rendered":"Do mortgage rates go up with inflation?"},"content":{"rendered":"

Home buying and economics seem to be at the forefront of everyone’s mind lately, and with that comes discussions of inflation, interest rates, and mortgages. As the economy continues to recover after the damages that the Coronavirus pandemic caused, rising mortgage interest rates don’t seem too far away.<\/p>\n

While other factors are definitely at play in the forecast of higher rates, it’s important to really understand the two concepts and their relationship.<\/p>\n

Defining inflation and mortgage interest<\/b><\/h2>\n

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Inflation refers to the decrease in purchasing power over time. In other words, it means that the value of currency decreases and can buy less than it could in the past. Inflation can be seen in the rising prices of goods and services and the actual face value of a country’s currency. For example, where $20 might have bought you a whole cart full of groceries several years ago, it now might get you a few key items as the prices have increased.<\/p>\n

Inflation can also be seen in action through massive government spending. As the government worked to put money in the pockets of consumers through COVID relief cheques, inflation started to spike as well. Raw materials and the cost of goods sold (COGs) increased, leading to supply chain shortages and more expensive consumer goods.<\/p>\n

The Consumer Price Index (CPI) and the Wholesale Price Index (WPI) are two of the most commonly used indexes used to monitor the rate of inflation.<\/p>\n

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Three types of inflation<\/b><\/h4>\n

There are three main types of inflation:<\/p>\n