Friday, July 18, 2008

Cost of Living Figures Increase

CPI jumped by 1.1 percent in June 2008 and has now climbed 5 percent in the last12 monthsAnother day, another piece of inflationary data.

June's Consumer Price Index showed a 5 percent year-over-year increase in what is now the largest annual Cost of Living increase for Americans in 17 years.

This is bad news for active home buyers because rising costs are considered inflationary and inflation causes mortgage rates to increase.

Predictably, mortgage rates jumped Wednesday morning after the CPI data was released and they continued to move higher throughout the day.

For most home loans, mortgage rates finished the day up by 0.125 percent.

Applying Wednesday's mortgage rate movement to the true cost of owning a home, the eighth-percent increase added $8 per $100,000 mortgaged per month. The silver lining of this cloud in our market is that our housing stock is still so affordable, that now may be the time to act before rates increase more.

(Image courtesy: The New York Times)