Tag: inflation (Page 1 of 2)

Truflation: A New Lens for Understanding Inflation and Seizing Market Opportunities

July 26, 2025 / Tom Bonetto / 0 Comments

As a potential home buyer, investor, or real estate professional, understanding inflation is critical to making informed financial decisions.

As The Lending Coach, I’m committed to helping my clients in Arizona and California build generational wealth through smart mortgage strategies.

One tool gaining attention in the economic landscape is Truflation, a blockchain-based, real-time inflation index that claims to offer a more accurate and timely alternative to the traditional Consumer Price Index (CPI) reported by the Bureau of Labor Statistics (BLS).

In this post, I’ll explore what Truflation is, evaluate its reliability compared to BLS data, and discuss how borrowers, investors, and real estate agents can leverage this metric to spot market opportunities.

What is “Truflation”?

Truflation is a decentralized, blockchain-based platform that tracks inflation in real time, using over 18 million data points from more than 60 data providers.

Unlike the BLS CPI, which relies on a fixed basket of goods and services and is updated monthly with a 45-day lag, Truflation pulls daily price data for a wide range of consumer goods and services. This allows it to reflect current market conditions more dynamically.

Truflation’s methodology is transparent, auditable, and market-driven, aiming to address perceived shortcomings in traditional inflation metrics, such as outdated frameworks and subjective adjustments.

For example, posts on X have highlighted Truflation’s advantages, noting its use of 15 million data points compared to the BLS’s 80,000, and its real-time updates versus the BLS’s delayed reporting.

Additionally, Truflation avoids “black box” methodologies and centralized control, making it an appealing alternative for those seeking economic transparency.

Is Trueflation More Reliable Than BLS CPI?

The BLS CPI, while widely used, has faced criticism for its limitations. The CPI framework, last significantly updated in 1999, may not fully capture the realities of today’s economy, where e-commerce, electric vehicles, and other modern factors play significant roles.

For instance, the CPI uses “hedonic adjustments” to account for quality improvements, which introduces subjectivity and can understate inflation’s impact. Additionally, the CPI excludes asset prices like real estate and stocks, potentially missing key drivers of wealth and cost-of-living changes.

Truflation, by contrast, offers several advantages:

roll of american dollar banknotes tightened with band

Real-Time Data: Truflation updates daily, providing a near-instantaneous view of price changes, while BLS data lags by weeks. This timeliness can be crucial for anticipating market shifts.
Granular and Transparent: With millions of data points and an auditable blockchain framework, Truflation reduces reliance on subjective adjustments and centralized control.
Correlation with CPI: Despite its differences, Truflation’s inflation measurements have shown a high correlation (0.97 to 0.99) with headline CPI since the Federal Reserve began tightening monetary policy, suggesting it’s a credible alternative.

However, Truflation is not without challenges. Its lack of seasonal adjustments and reliance on actual prices without imputation may lead to volatility in its readings.

Additionally, as a newer metric, it lacks the long-term track record and institutional acceptance of the BLS CPI, which remains the Federal Reserve’s primary reference for monetary policy. While some X users argue Truflation is “way more accurate than the market,” its reliability depends on the context and use case.

As The Lending Coach, I specifically value transparency and accuracy, and Truflation’s approach aligns with my commitment to honesty and understanding of my clients’ needs.

While the BLS CPI remains the standard, Truflation’s real-time insights offer a compelling complement for those navigating fast-moving markets.

Market Opportunities for Borrowers and Real Estate Agents

For borrowers, investors, and real estate agents, Truflation’s real-time data can provide a competitive edge in identifying market opportunities, particularly in the housing market. Here’s how:

For Borrowers

Anticipating Interest Rate Trends: Truflation’s ability to signal inflation trends earlier than the BLS CPI can help borrowers anticipate Federal Reserve actions. For example, a post on X noted that Truflation identified a disinflationary trend in December 2024, ahead of the BLS’s confirmation. If Truflation indicates rising inflation, borrowers may want to lock in fixed-rate mortgages sooner to avoid higher interest rates. At Efficient Lending, we guide clients to secure favorable terms early, ensuring affordability in an inflationary environment.
Leveraging Fixed-Rate Mortgages: Inflation benefits borrowers with fixed-rate mortgages, as future payments are made with “cheaper” dollars. Truflation’s real-time insights can help borrowers time their applications to capitalize on this dynamic before rates rise.
Wealth-Building Opportunities: Real estate is a proven hedge against inflation, as home values often rise faster than the CPI. Truflation’s data can help borrowers identify periods of accelerating inflation, signaling a strong time to invest in property to build long-term wealth.

For Real Estate Agents and Investors

Market Timing: Truflation’s daily updates allow agents to spot inflationary trends that could affect housing demand and pricing. For instance, if Truflation signals rising inflation, agents can advise clients to act quickly before higher mortgage rates reduce affordability.
Rental Market Insights: During inflationary periods, rental prices tend to rise due to increased demand and limited supply. Truflation’s granular data can help agents identify markets where rental demand is surging, enabling them to guide investor clients toward high-return opportunities.
Client Education: Agents can use Truflation’s transparent data to educate clients about market conditions, building trust through clear, data-driven advice. This aligns with Efficient Lending’s value of explaining the nuances of mortgage and real estate decisions to empower clients.

Recent Results and Context

As of July 2025, Truflation reported a U.S. inflation rate of 1.82%, compared to the BLS CPI’s 2.7% for the 12 months ending June.

This discrepancy suggests Truflation may detect deflationary or disinflationary trends faster than the BLS, potentially giving borrowers and agents an early warning to adjust strategies.

For example, a lower Truflation rate could signal a window to secure lower mortgage rates before the market catches up.

How The Lending Coach Can Help

I believe in building lasting relationships based on trust, transparency, and education.

Whether you’re a borrower looking to secure a mortgage that fits your unique needs or a real estate agent seeking to guide clients through a dynamic market, I’m here to help.

By staying informed about tools like Truflation, I can provide timely advice to help you capitalize on market opportunities and build generational wealth through real estate.

To learn more about how inflation trends affect your mortgage or real estate strategy, please do reach out to me here…

Ready to take the next step? You can set up an appointment with me here…

Sources:

Truflation.com
Bureau of Labor Statistics
GIS Reports Online
Arrived.com
Investopedia
Posts on X

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Tariffs, Inflation, The Fed…and Mortgage Rates

May 12, 2025 / Tom Bonetto

tariffs and trade usa and china relations

There’s a good deal of uncertainty surrounding tariffs and what they will do to the economy – especially mortgage rates.

In today’s global economy, tariffs—taxes on imported goods—are an important tool used by governments to influence trade and protect domestic industries. When a country, such as the United States, imposes tariffs on products from other nations, it can affect not just the prices of those goods but also the broader economy.

brown and black beans in clear glass jar

One of the key areas impacted by tariffs is inflation, which is closely monitored and managed by the Federal Reserve.

Understanding how tariffs influence inflation helps explain how they complicate the Federal Reserve’s role in keeping the economy stable.

What Are Tariffs and Why Are They Used?

Tariffs are used by governments to make imported goods more expensive, with the goal of encouraging consumers to buy domestically produced products instead.

For example, if the U.S. imposes a tariff on foreign-made steel, American steel becomes more competitive in price.

While this might help U.S. manufacturers, it also raises the cost of materials for other businesses that rely on imported goods, leading to higher prices for finished products.

Tariffs and Consumer Prices

When companies have to pay more to import goods, those increased costs often get passed along to consumers.

This leads to higher prices for everyday items like electronics, clothing, and food. These price increases contribute to inflation, which is the general rise in the cost of living.

Tariffs can also raise production costs for businesses, which can then slow economic growth or cause companies to cut jobs to balance their budgets.

What Is Inflation and Why Does It Matter?

Inflation refers to the rate at which prices for goods and services rise over time. A low-to-moderate level of inflation is normal and can signal a healthy economy.

However, when inflation rises too quickly, it can erode purchasing power and lead to uncertainty in the market. People may struggle to afford necessities, and businesses might delay investment. That’s why inflation control is one of the primary responsibilities of the Federal Reserve.

You can find out more about inflation and mortgage rates here…

The Role of the Federal Reserve

One of the Fed’s key jobs is to manage inflation and promote stable prices by adjusting interest rates and using other monetary policy tools.

When inflation rises, the Fed often raises interest rates to slow down spending and borrowing.

Conversely, when inflation is too low, the Fed may lower interest rates to stimulate the economy. Tariffs can interfere with this balance by introducing unexpected upward pressure on prices.

How Tariffs Complicate the Fed’s Decisions

When inflation is driven by tariffs rather than strong consumer demand, it creates a challenge for the Federal Reserve. If the Fed raises interest rates in response to tariff-driven inflation, it could unintentionally slow the economy or increase unemployment.

However, if it does nothing, inflation might continue to rise. This puts the Fed in a difficult position, having to choose between fighting inflation or supporting growth—two goals that can conflict when tariffs are involved.

Real-World Examples

Recent U.S. tariffs on Chinese goods and other imports have demonstrated these effects. Following the trade war between the U.S. and China, prices rose for goods like washing machines, electronics, and industrial materials.

Inflation increased in some sectors, and businesses adjusted by either raising prices or cutting costs.

The Federal Reserve had to carefully analyze these developments when making decisions about interest rates and monetary policy during that time.

Inflation, Mortgage Rates, and Treasury Yields

Mortgage rates are primarily driven by inflation, which erodes the buying power of the fixed return that a mortgage holder receives. When inflation rises, lenders demand a higher interest rate to offset the more rapid erosion of their buying power.

Fixed mortgage rates and Treasury yields tend to move together because fixed-income investors compare the returns they can get on government and mortgage-backed securities.

Investors compare yields on long-term Treasuries to mortgage-backed securities and corporate bonds. All bond yields (including mortgage backed securities) are affected by Treasury yields, because they compete for the same type of investor.

Mortgages, in turn, offer a higher return for more risk. Investors purchase securities backed by the value of the home loans—so-called mortgage-backed securities.

When Treasury yields rise, investors in mortgage-backed securities demand higher rates. They want compensation for the greater risk.

What Really Causes Rates to Rise and Fall?

Mortgage rates are determined by a complex interaction of economic factors, such as the level and direction of the bond market, including 10-year Treasury yields; the Federal Reserve’s current monetary policy, especially as it relates to funding government-backed mortgages; and competition between lenders and across loan types.

Because fluctuations can be caused by any number of these at once, it’s generally difficult to attribute the change to any one factor.

Although in our current situation, inflation (and the Fed’s fear of it) is the number one cause. When this is coupled with the large increase in government spending and tariff uncertainty, you see a double dose of fear in the markets.

Conclusion

These are some very interesting economic times, indeed…and not easy for monetary policy specialists.

The Fed must carefully evaluate whether inflation is being driven by consumer demand or by policy decisions like tariffs.

As global trade tensions continue to influence markets, the relationship between tariffs, inflation, and the Federal Reserve remains a critical area of economic concern – and these will all impact mortgage rates.

All of these factors are causing uncertainty in the marketplace, and have negatively impacted mortgage rates in the last month. With that said, inflation really is the key driver…and if those readings come down, mortgage rates will, too.

Do reach out to me to discuss what’s happening in the marketplace and how you might be able to take advantage!

Why Mortgage Rates Are Staying Stubbornly High…and What Does The Future Hold?

April 22, 2024 / Tom Bonetto

Mortgage interest rates are staying higher than initially anticipated, due to the staying power of inflation today.

Inflation is a terrible thing for prosperous, economic growth…and it significantly impacts mortgage rates for the worst.

Today, we are seeing the impact of stubbornly sticky inflation in the mortgage marketplace – and relief doesn’t appear to be coming in the near term.

The most recent inflation data showed prices rising by 3.5% year-over-year in March, which exceeds the Federal Reserve’s 2% target.

Why Does This Happen?

Rising inflation shrinks buying power as prices of goods and services increase. Higher prices can then influence the Federal Reserve’s interest rate policy, affecting the cost of borrowing for lending products like mortgages.

inflation erodes the purchasing power of money over time. As the cost of living rises, the value of each dollar decreases, leading to a decline in the real value of mortgage payments. Hence, mortgage lenders must charge more in interest to make the same profit.

Then, as inflation cools, mortgage interest rates can be expected to ease as well.

The Federal Reserve and the 10-Year Treasury Note

When inflation rises, the Federal Reserve banks has respond by tightening monetary policy to control inflationary pressures. This involves raising the federal funds rates to reduce borrowing and spending, thereby slowing down economic growth and inflation.

At this point, this strategy hasn’t worked nearly as well as expected.

More importantly, the Federal Reserve does not set mortgage rates. Instead, the central bank sets the federal funds rate target, the interest rate that banks lend money to one another overnight. A Fed increase in this short-term interest rate often pushes up long-term interest rates for U.S. Treasuries.

Fixed-rate mortgages are tied to the yield on 10-year U.S. Treasury notes, which are government-issued bonds that mature in a decade. When the 10-year Treasury yield increases, the 30-year mortgage rate tends to do the same.

Short Term Outlook

The average mortgage rate for a 30-year fixed is 7.12%, nearly double its 3.22% level in early 2022.

“There is some optimism for rate cuts, however, we were forecasting three to four rate cuts in 2024 at the beginning of the year, and it now is unlikely. People are now adjusting those expectations down to two,” says Ali Nassirian, vice president of consumer & home lending at Travis Credit Union.

“Looking at the current data, there’s roughly a 50% chance we’ll see a rate cut in June,” Nassirian adds.

As little as two weeks ago, there was generally a greater optimism that the Fed would start rate cuts in June. However, that now seems to many like a hopeful start date.

There’s also a good chance that mortgage rates will remain relatively unchanged for the remainder of 2024.

“I don’t see a rate cut at the next Fed meeting. I think June would be the soonest cut we see. Even if they cut rates two or three times this year, I don’t think we will see many moves in the mortgage market from those,” says Brian Durham, vice president of risk management and managing broker at Realty Group LLC.

“The things that will have a bigger impact on the mortgage markets will be things like the Fed’s quantitative tightening policy, job numbers, and other inflationary or deflationary variables like the cost of oil,” Durham adds.

You can find out more here from Jake Safane at MoneyWatch…

In Conclusion

Mortgage rate forecasts vary depending on the expert you ask, but the overall consensus seems to be that there won’t be significant decreases in the near future. With that said, conditions can change, as recent expectations of rate cuts so far in 2024 have not come to to pass.

It’s actually possible that we’ll even see mortgage interest rates rise if inflation persists.

So, some buyers might prefer to act now, rather than waiting for however long it might take for mortgage rates to become more favorable, if at all.

Please do reach out to me to discuss how to make the best mortgage and purchasing decisions in today’s environment.

Inflation and Real Estate – Should Buyers Wait? History Says “NO!”

July 23, 2022 / Tom Bonetto

Inflation is hot…and so is real estate. But what does the future hold for both?

As we’ve talked about before, the Federal Reserve is late to the party in dealing with inflation and the latest data shows the rate of inflation is still rising.

Many are feeling the pinch in their wallets, at the gas pump, and at the grocery store.

For would-be real estate buyers that just begs the question…is now a good time to purchase a home?

I’m linking to an article from the real estate blog Keeping Current Matters, and the author does a great job in highlighting why now might be a very good time to buy. You can access the entire article here…

Greg McBride, the Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market:

“Inflation will have a strong influence on where mortgage rates go in the months ahead…Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”

While there’s no denying it’s more expensive to buy and finance a property this year than it was last year, it doesn’t mean potential buyers should pause their search. Here’s why…

History Says So – Real Estate Is A Great Hedge Against Inflation

During periods of inflation, prices generally rise across all areas of the economy.

Historically, however, real estate ownership is a fantastic protection against those increasing costs because buyers can “lock-in” what’s likely the household’s largest monthly fixed cost for the duration of your loan.

Not to mention, as property prices continue to appreciate, the home’s value will, as well.

That’s why Mark Cussen, Financial Writer at Investopedia, says:

“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”

Secondly, nearly all industry experts agree that although the current rate of home appreciation can’t stay this hot, the likelihood of homes losing value is extraordinarily slim. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

Warning Sign with Arrow Labeled Inflation

In Conclusion

Purchasing real estate is one of the best financial decisions that can be made during inflationary times. Buyers also receive the advantage of the added security of owning their property in a time when experts are forecasting prices to continue to rise.

If you are considering a purchase, your real estate search shouldn’t go on hold because of rising inflation or higher mortgage rates. Contact me for more…as it would be my pleasure to help you.

Mortgage Rate Update – March 2022

March 22, 2022 / Tom Bonetto

white android tablet turned on displaying a graph

Mortgage interest rates just keep moving higher. They have risen nearly 1.5% points since January 3^rd… and it seems like almost every day rates move up again.

The outlook for lower rates isn’t great right now, thanks mostly to the Federal Reserve’s handling of the money supply and out-of-control inflation.

How will the Fed’s recently announced quarter point hike to the Fed Funds Rate affect mortgage interest rates? The answer may surprise you.

The Federal Reserve

The Fed Funds Rate is not the same as a mortgage rate because it can change from one day to another, while mortgage rates can be in effect for 30 years. More on that here….

Warning Sign Showing an Arrow Labeled Inflation

You probably know that inflation has been rising significantly of late, and as a result, so have mortgage rates. Inflation is pushing 9%, the highest level we’ve seen in over 40 years. This has moved mortgage rates into the mid 4% range this week.

Essentially, The Federal Reserve has bungled their management of inflation and now have to make severe changes to offset the damage. This brings market instability and increased mortgage rates.

When the Fed hikes rates, they are trying to slow the economy and curb inflation. If successful in cooling inflation, mortgage rates will decline. History proves this during rate hike cycles for the past 50 years. Unfortunately, this isn’t an overnight fix.

*Federal Reserve Chairman Jerome Powell*

However, the Fed may also reduce its holdings of Mortgage Bonds, which can cause some interest rate volatility. And if inflation continue to surge, the Fed might not be able to do much to help. The situation isn’t great at this moment.

30-year fixed mortgage rates

The average 30-year fixed-refinance rate is 4.53 percent, up 20 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 4.17 percent.

At the current average rate, you’ll pay $503.13 per month in principal and interest for every $100,000 you borrow. That’s $7.08 higher compared with last week.

Mortgage Rates and Treasury Yields – a great barometer

Fixed mortgage rates and Treasury yields tend to move together because fixed-income investors compare the returns they can get on government and mortgage-backed securities.

Mortgages, in turn, offer a higher return for more risk. Investors purchase securities backed by the value of the home loans—so-called mortgage-backed securities. When Treasury yields rise, investors in mortgage-backed securities demand higher rates. They want compensation for the greater risk.

You can dig deeper by reading Kimberly Amadeo’s article here…

You can see the rise in the 10-year treasury yield here…and mortgage rates have been following a nearly identical course over the last 3 months.

Graph of Treasury Yield from Dec 27 to Mar 21

What Really Causes Rates to Rise and Fall?

Because fluctuations can be caused by any number of these at once, it’s generally difficult to attribute the change to any one factor. Although in our current situation, inflation (and the Fed’s mismanagement of it) is the number one cause. When this is coupled with the large increase in government spending, you see a double dose of fear in the markets.

In today’s case, the Federal Reserve has been buying billions of dollars of bonds in response to the pandemic’s economic pressures, and continues to do so. This bond-buying policy (and not the more publicized federal funds rate) is a major influencer on mortgage rates.

On March 16, the Fed announced that it expects to begin reducing its balance sheet in May, meaning it will start reducing the overall amount of bonds it owns. This will be on top of its existing move to reduce new bond purchases by an increment every month, the so-called taper, which began in November.

You can find out more here from Investopedia….

Most experts agree that this “taper” will also move treasury yields and mortgage rates higher.

Moving Forward

There may come a point when mortgage rates drop back down and borrowers can enjoy some of the remarkably low rates they were available from mid-2020 through late 2021.

And throughout 2022, we could have periods when rates dip to some degree.

But for the most part, borrowers may need to come to terms with the fact that the days of record-low borrowing are behind us.

With that said, it’s important to put today’s rates into perspective. Compared to the rates we saw from mid-2020 through the end of 2021, the rates above look high. But historically speaking, locking in a 30-year mortgage anywhere in the 4% range is not a bad deal at all.

Would you like to find out more? Contact me to discuss your current situation and how you might be able to take advantage of today’s market. It would be my pleasure to help you!

Tag: inflation (Page 1 of 2)

Truflation: A New Lens for Understanding Inflation and Seizing Market Opportunities

What is “Truflation”?

Is Trueflation More Reliable Than BLS CPI?

Market Opportunities for Borrowers and Real Estate Agents

For Borrowers

For Real Estate Agents and Investors

Recent Results and Context

How The Lending Coach Can Help

Tariffs, Inflation, The Fed…and Mortgage Rates

What Are Tariffs and Why Are They Used?

Tariffs and Consumer Prices

What Is Inflation and Why Does It Matter?

The Role of the Federal Reserve

How Tariffs Complicate the Fed’s Decisions

Real-World Examples

Inflation, Mortgage Rates, and Treasury Yields

What Really Causes Rates to Rise and Fall?

Conclusion

Why Mortgage Rates Are Staying Stubbornly High…and What Does The Future Hold?

Why Does This Happen?

The Federal Reserve and the 10-Year Treasury Note

Short Term Outlook

In Conclusion

Inflation and Real Estate – Should Buyers Wait? History Says “NO!”

History Says So – Real Estate Is A Great Hedge Against Inflation

In Conclusion

Mortgage Rate Update – March 2022

The Federal Reserve

30-year fixed mortgage rates

Mortgage Rates and Treasury Yields – a great barometer

What Really Causes Rates to Rise and Fall?

Moving Forward

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