Navigating the Housing Market in Times of Inflation

May 31, 2023 by Chevron Federal Credit Union

Inflation has an impact on the housing market. For one, when inflation is high, construction costs can rise. With higher construction costs, fewer new builds hit the market. That’s great for sellers but not for buyers who need to compete for existing homes. Inflation can also make getting a mortgage more expensive.

But that doesn’t mean you have to wait for inflation to cool before you can buy a home. With the right strategies, you can find your dream property and save money on your mortgage.

Grow your down payment faster

A larger down payment reduces the amount you need to borrow, potentially lowering your monthly mortgage payments and saving you money in interest over the life of the loan. A significant down payment also makes you a more attractive borrower to lenders.

While many experts recommend putting at least 20% down, you may qualify for far less. For example, Chevron Federal Credit Union members may be able to buy a home with as little as 3% down.

To grow your savings faster, leverage interest. Store your funds in accounts with a higher rate of return. Over time, the compound interest will add up, helping you save more toward your down payment.

Set a budget

Limited supply and competition from other buyers can quickly push homes above the asking price. While putting in a higher bid may make your offer more attractive, you don’t want to commit to more than you can comfortably afford.

Before you start home shopping, determine your budget cap. Don’t forget to include other related expenses like moving, closing costs and utilities into your budget.

Be flexible with your wish list

With less housing inventory, finding everything on your wish list — and with a price tag you can afford — might prove challenging.

Consider prioritizing your needs over your wants and be open to making compromises. Consider that home upgrades can be made later on.

By broadening your search criteria, you can increase your chances of finding a suitable home within your budget.

Be proactive

If you’re on a deadline, expect to be more proactive in your home search. Work with a licensed real estate agent who can keep an eye on new listings. Be prepared to look at several properties and be open to considering new areas to live in.

Putting in a quick offer can also help you stand out from other buyers, but don’t move so fast that you make a snap judgment. Submitting a well-thought-out offer for a home you want is always a better decision.

Compare rates between mortgage lenders

When obtaining a mortgage, comparing rates and terms from multiple lenders is essential. Some lenders offer lower fees and better interest rates than others, potentially saving you a significant amount of money over the life of your loan.

When comparing, several things such as interest rates, loan type and loan length are crucial, but don’t overlook fees. Fees can vary widely between lenders. For example, while many commercial banks charge a 1% origination fee, Chevron Federal Credit Union offers a flat $715 fee.

Lock in your rate early

You don’t have to wait until you’ve found a home to start applying for a mortgage. Getting pre-qualified can help you “lock in” your interest rate (essentially securing a set rate for up to 60 days). Mortgage rates fluctuate daily. Locking in a lower rate can save you thousands throughout your loan.

Have questions about getting a mortgage? Our dedicated loan officers are here to guide you every step of the way. Call our home loan help desk anytime at 888-334-5120.


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