The cost of living—aka inflation rate—is now higher than the average mortgage rate in the U.S. That’s the headline out of the O.C. Register, where real estate data guru Jonathan Lansner has been crunching numbers from April’s Consumer Price Index.
The problem, of course, is that the lending system is set up so that loan rates should be above the inflation rate. Otherwise, how are lenders expected to collect back? To put it in perspective, the last time inflation topped mortgage was 1980.
Per Lansner, U.S. inflation is growing at a 4.2 percent annual pace, the largest jump since 2008. As widely reported, mortgage rates are at historic lows, hovering around the 3 percent mark. Over the past 50 years, mortgages ran an average of 4 percentage points above the inflation rate.
Head over to the O.C. Register here and read Lansner’s full take on the inflation-over-mortgage debate, including how California’s slower economic rebound is working to our advantage.