Good news! The national economy is growing. Unemployment remains low. Corporate revenues are up.
For housing and mortgage professionals, however, these apparent highlights are persistent nuisances. They signal that the economy is still running hot – or at least more than lukewarm – and inflation may need more cold water from the Federal Reserve to cool it off.
“Cold water” comes from the central bank’s intent to maintain high financing costs for banks that borrow from other financial institutions. In turn, consumers experience the trickle-down effect in the form of costlier lending rates when holding credit card debt or purchasing cars and homes. (More on this in a moment.)
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