The Impact of Inflation on Mortgage Rates in L.A. and Beverly Hills, CA

The Impact of Inflation on Mortgage Rates in L.A. and Beverly Hills, CA | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert

If you’ve been keeping up with the latest news on inflation and mortgage rates, you may have seen headlines about the recent decision from the Federal Reserve (the Fed). But what does it all mean for the housing market, especially in Los Angeles and Beverly Hills, CA? Let’s take a closer look.

Inflation and the Housing Market Despite the Fed’s efforts to lower inflation, the latest data shows that inflation rates remain higher than the target (2%). This played a role in the Fed's decision to raise the Federal Funds Rate last week. As Bankrate explains, the hikes aimed to cool an economy that was rebounding from the coronavirus recession of 2020.

While the Fed’s actions don’t directly dictate what happens with mortgage rates, their decisions do have an impact and contributed to the intentional cooldown in the housing market last year. In Los Angeles and Beverly Hills, the cooling trend in the housing market has been observed with a slowdown in price growth and a surge in supply, making it a buyer's market.

How This Impacts You During times of high inflation, your everyday expenses go up. That means you’ve likely felt the pinch at the gas pump and in the grocery store. By raising the Federal Funds Rate, the Fed is actively trying to lower inflation. If the Fed is successful, it could also ultimately lead to lower mortgage rates and better homebuying affordability for you. That’s because when inflation is high, mortgage rates tend to be high. But, as inflation cools, experts say mortgage rates will likely fall.

Where Experts Think Mortgage Rates and Inflation Will Go from Here Moving forward, both inflation and mortgage rates will continue to impact the housing market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says, “Mortgage rates are likely to descend lower later in the year as the consumer price inflation calms down.” This is great news for homebuyers in Los Angeles and Beverly Hills, who have seen some of the highest home prices in the country.

Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), also predicts that “mortgage rates will drift down over the course of the year as the economy slows . . .” This could lead to an increase in buyer demand and a more balanced housing market in Los Angeles and Beverly Hills.

Bottom Line Don’t let headlines about the latest decision from the Fed confuse you. Where mortgage rates go from here depends on what happens with inflation. If inflation cools, mortgage rates should tick down as a result. As a homebuyer in Los Angeles or Beverly Hills, it’s important to stay informed on the latest insights and connect with a trusted real estate advisor who can help you navigate the market changes and make informed decisions about your

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