23May2008
Dan Green
Author
Dan Green
Filed Under
Things That Change Mortgage Rates

The Oil-to-Mortgage-Rates Chain Reaction

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Rapidly rising oil prices can lead to inflation AND recession -- both are bad for mortgage rates

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
Author
Dan Green

About the Author

Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator call 513-443-2020.

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