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How Buying a Home Can Protect Against Inflation

by | Apr 26, 2022 | Buying, Finance

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Why is everything so expensive?!

Rising inflation rates have affected all of us. Prices for things like gas, groceries, and other services have been rising at an alarming rate. In fact, such a dramatic inflationary period hasn’t happened since the early 80’s. Not only that, Interest Rates have risen at their fastest pace in years and housing prices continue to increase.

If all of this makes you want to crawl under a rock and give up on homeownership forever, consider this:

While 30-Year Fixed Mortgage Rates have risen to 5.2% from 3.2% this time last year, inflation rates have increased even more dramatically from 2.6% to 8.5% year-over-year. This means that money borrowed today has more buying power than it will as inflation rates continue to rise. An interest rate of 5.2% is still historically low in the context of the last 50 years (rates hit 16.63% in 1981!) and with a retrospective inflation rate of 8.5% year-over-year, your real effective interest rate is actually negative!

How does that work?

Economically speaking, inflation benefits borrowers. It allows you to pay your lender back with money worth less than when it was borrowed. Once your mortgage rate is locked in, you stabilize your monthly housing expenses against inflation. While rent and other prices continue to increase, your fixed monthly mortgage payment remains the same for the lifetime of your mortgage (typically 15-30 years). No matter how high inflation rates get, your monthly payment will never increase.

One of the best ways to shield yourself from rising inflation rates is by buying a home. 

Not only will you stabilize one of your largest monthly expenses, you will be investing in a historically secure asset. Houses traditionally retain their value through times of heavy inflation. If inflation and mortgage rates go down, you can always refinance at a lower rate. If they continue to rise as predicted, you’ll make a substantial return on your investment

For the last 50 years, home values have historically appreciated more than inflation rates.

How can Trelora help?

Our expert team can help further ease your mind against rising inflation rates. When you buy with Trelora, we give you up to $6K cash back right from our commissions. This extra money could help strengthen your bid, offset rising expenses, or be put towards closing costs. Or, if you’re like us, you could put it towards your next vacation. You just bought a home and protected your future assets against an uncertain world, you deserve it.

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The information contained in this blog is for general information purposes only, and while believed to be accurate, Trelora assumes no legal responsibility for accuracy. Information provided within should not relied upon as legal advice. Please consult with your local advisors for independent information regarding availability and applicability in your market.