If the presence of inflation causes mortgage rates to rise, then the absence of inflation should cause mortgage rates to fall. And, in most markets that’s true.

Today, it’s not.

Despite a deep, month-over-month dip in consumer prices not seen since 1947, Altamonte Springs mortgage rates not steady by any stretch of the imagination…  they are still as volatile as ever!

The main reason why rates are fluctuating so, is that the Cost of Living didn’t just ease last month — it plunged.

In fact, the monthly drop was so severe that Wall Street now questions whether this summer’s record-breaking inflation will lead to equally-strong deflation this winter.

In economic terms, deflation is the opposite of inflation — it’s when prices and wages chase each other lower… have you been watching oil?  It was like $54 dollars a barrel today! The two can be equally bad for the economy. What’s often best for Americans are moderate, steady readings. [What does steady look like?]

Because of the rapid decline, markets fear that Consumer Prices may have swung way past moderate in October and started a downward spiral. As always, however, market opinions can change quickly and when they do, they usually take mortgage rates with them.

(Image courtesy: The Wall Street Journal Online)