Is Inflation Around the Corner?

Inflation is already here in these sectors say economists.

“Don’t say I didn’t warn you. The possibility of a 1970’s-style [inflation in] America in the year 2021 is increasingly looking like a reality”, begins Trish Regan in a recent post in American Consequences. Consequences. It’s somewhat preposterous to believe that there are no economic repercussions when our money supply is increased by 24% in a single year- a figure some experts expect to climb to 40% by the end of 2021.

Inflation occurs when your purchasing power decreases and the costs of goods and services rise. So how could inflation affect older homeowners and reverse mortgage lenders?

First, when Treasury yields rise, secondary market investors who purchase mortgage-backed securities demand higher rates. They want compensation for the greater risk. When Treasury yields drop we see lower rates on mortgages which prop up or stimulate the housing market. Today low rates have provided a temporary bright spot in the U.S. economy and have driven a record number of reverse mortgage refinances.

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