{"id":6582,"date":"2022-04-05T16:22:59","date_gmt":"2022-04-05T16:22:59","guid":{"rendered":"https:\/\/chenoafund.org\/?p=6582"},"modified":"2024-07-30T14:46:55","modified_gmt":"2024-07-30T14:46:55","slug":"how-inflation-may-impact-lenders","status":"publish","type":"post","link":"https:\/\/chenoafund.org\/how-inflation-may-impact-lenders\/","title":{"rendered":"How Inflation May Impact Lenders"},"content":{"rendered":"<p class=\"has-black-color has-text-color\">\u201cTransitory inflation\u201d has proven to have much more staying power than the word <em>transitory<\/em> might suggest, and as a result many borrowers are seeing the purchase of a home grow ever more difficult\u2014specifically, more expensive. For borrowers familiar with the unprecedentedly low rates of yesteryear, this can be extremely frustrating, or even feel unfair. However, these growing expenses aren\u2019t coming from nowhere\u2014inflation hurts lenders, too, and as margins grow tighter lenders are forced to increase costs just to stay in business. Let\u2019s take a simplified look at what inflation does to our lenders.<\/p>\n<h2 class=\"has-vivid-red-color has-text-color has-large-font-size\"><strong>What is inflation?\u00a0<\/strong><\/h2>\n<p class=\"has-black-color has-text-color\">Inflation is \u201cthe decline of<a href=\"https:\/\/www.investopedia.com\/terms\/i\/inflation.asp\"> purchasing power<\/a> of a given currency over time.\u201d In other words, inflation, though it sounds like a paradox, <em>devalues<\/em> currency, which is why prices are going up everywhere, not just in the housing market. This affect\u2019s everyone\u2019s money supply, from borrowers to lenders, which means that lenders are also, effectively, losing money to inflation and the rising costs associated. Everyone is hurting!<\/p>\n<p class=\"has-black-color has-text-color\">In order to keep their doors open, lenders are led\u00a0 to look for ways to compensate for rising costs and devalued currency. Since lenders specifically make money through the mortgages that they offer, either by servicing the mortgage directly or by selling the mortgage to an investor (who is also being hurt by inflation), this impacts most lenders to raise interest rates and, sometimes, charge more in fees. Lenders try to limit this as much as they can because, naturally, borrowers are less interested in purchasing a home when rates and fees are high, but all lenders are still forced to do this to a certain extent to keep the lights on and the employees paid.<\/p>\n<p class=\"has-black-color has-text-color\">At the same time, demand for credit tends to increase when the value of money falls, because what people could once afford\u2014or nearly afford\u2014is growing further and further out of reach. (This can be tempered by the costs of credit rising as well.) So borrowers will keep trying to purchase homes, but will find it more expensive as a result. There is a light at the end of the tunnel for these borrowers: eventually, when inflation stabilizes and interest rates start to go down again, they will be able to refinance to a lower interest rate.<\/p>\n<p class=\"has-vivid-red-color has-text-color has-large-font-size\"><strong>So what can borrowers do in the meantime?<\/strong><\/p>\n<p class=\"has-black-color has-text-color\">Unfortunately, for some borrowers, the most financially responsible position is to hold strong and wait for rates to go down again\u2014if you can\u2019t reasonably afford a monthly housing payment at current interest rates and house prices, it just doesn\u2019t make sense to try and force a home purchase. Other borrowers, however, may be able to afford a home purchase through the use of down payment assistance programs to help bridge the gap between what they have and what purchasing a home now costs. In either instance, just know that interest rates aren\u2019t rising because of greedy lenders\u2014if that were the case, interest rates would never go down when the market improves, and recent record-low interest rates would have never happened. Interest rates are rising because inflation hurts everyone.<\/p>\n<p class=\"has-black-color has-text-color\">To learn more about CBC Mortgage Agency\u2019s down payment assistance program known as Chenoa Fund visit <a href=\"https:\/\/chenoafund.org\/\"><strong>chenoafund.org<\/strong><\/a>.<\/p>\n<p class=\"has-black-color has-text-color\">This article should not be taken as financial counsel. Borrowers are always recommended to speak with a qualified expert before making any major financial decisions.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cTransitory inflation\u201d has proven to have much more staying power than the word transitory might suggest, and as a result many borrowers are seeing the&#8230;<\/p>\n","protected":false},"author":4,"featured_media":6585,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37],"tags":[271],"class_list":{"0":"post-6582","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-chenoa-talk","8":"tag-inflation"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Inflation May Impact Lenders - CBC Mortgage Agency<\/title>\n<meta name=\"description\" content=\"Explore how inflation can affect lenders, including changes in borrowing costs, credit availability, and loan performance.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chenoafund.org\/how-inflation-may-impact-lenders\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Inflation May Impact Lenders - 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