When energy costs increase, there are two ways it can knock the economy out of equlibrium:

1. Businesses cut back on spending, creating a recessionary ripple effect
2. Business pass on higher costs to consumers, creating an inflationary ripple effect

But when energy costs increase rapidly, the ripples can make like a splash, sinking the mortgage market along with the entire economic ship and when the mortgage market fails, prices drop and rates go up. 

In part from this week's rally to $135 per barrel, oil prices are now up 50 percent since February.  It's one reason why mortgage rates spiked this week.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.