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Your Local Gas Station May Have Clues About Tomorrow’s Mortgage Rates

May 7, 2009 by · 2 Comments 

The retail price of gasoline is rising nationwide, now up 30 percent since the New Year.

It’s a similar run-up to what we’ve seen for retail gas prices in each of the last 5 Spring Seasons.

For people trying to time the mortgage market’s bottom, clues about the future of mortgage rates may be at the local gas station.

Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing in on its 2009 highpoint. As these energy costs grow, so do inflationary pressures on the U.S. economy.

Inflation, of course, is awful for mortgage rates. When it’s present, mortgage markets deteriorate and rates tend to rise — often sharply and with little advance warning.

So, for today’s homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability. Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.

Since last week, gas prices are already up by 10 cents per gallon.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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2 Responses to “Your Local Gas Station May Have Clues About Tomorrow’s Mortgage Rates”
  1. Marte Cliff says:

    That’s very interesting – does a drop in the price of gas at the pump generally signal falling mortgage interest rates? Or is this one of those “goes up but not down” things?

    One more reason for people who plan to buy a home to get with it. Those first time buyers need to get moving, too. November 30 will be here before we know it!

  2. James K Barath, CMPS says:


    Generically speaking inflationary data is bad for mortgage bonds. This was evident to the monstrous inflationary pressure of oil prices last spring.

    Conversely, as we saw last fall when falling commodity prices was the topic of the markets deflation was the headline. This ulitmately lead to falling mortgage rates.

    Inflation / deflation has a high correlation to the performance of both the stock market and the bond market.

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