Lower Gas Prices in Orlando – Orlando’s real estate and mortgage Savior?

Okay, [my signature beginning for the return readers] given the stock market’s recent plummet, it is not at all surprising that oil’s free-fall has got very little attention. That doesn’t make it any less relevant though.

Since peaking at like $146 per barrel, oil prices are off by a HUGE amount. Friday, it was at $77.70. [Note the graph is GAS prices, not oil.] For those, like me, that went to public school… that is almost HALF.

Falling gas prices are an important positive for the U.S. economy [have you heard that recently from the media?] because less money spent on Exxon’s elixir means that more money is saved per household for everyday items including food and other staples. Don’t forget the cost of energy affects almost every level of the things we need and buy.

Did you know that consumer spending makes up two-thirds of the economy.

Therefore, falling gas prices may reduce the odds of a forecasted recession. Because Americans are notoriously poor savers, hellooooooo…negative savings rate????…. the extra cash-on-hand is likely to get spent which, in turn, will push the economy forward through the upcoming holiday shopping season. Yeah, it is close… time flies huh?

So, just as inflation [if you remember from a previous post] can bad for Orlando mortgage rates, so can an impending recession… duuhhhhhh. And while recession won’t always cause mortgage rates to rise, right now, it’s one of the factors driving rates higher in this “new world”. Falling gas prices may help keep that scenario ain check.

Chris the Implementer

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Written by Chris Brown, an Orlando Loan Officer. For more information about purchase loans or refinances on primary residences or investment properties, please contact me directly @ 407-377-0500 x 210.

Mortgage Chili: Gas Prices and Mortgage – The relationship…

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Crude oil prices jumped $25 at one point Monday, ending the day up by 16 percent.

This is an unwelcome development for home buyers because the same market forces that pushed up oil prices had a similar impact on mortgage rates.

It all comes down to the U.S. dollar.

Because both crude oil and mortgage-backed bonds are denominated in dollars, the fate of both instruments has been closely tied to the greenback lately. [I know, i know…. “What Chris?!”]

Well, with respect to the mortgage market, when the dollar has been strengthening, rates have tended to fall.  And, when the dollar has been weakening, mortgage rates have tended to rise.

Yesterday, the U.S. dollar had its worst one-day performance against the Euro in history so it only follows that conforming mortgage rates spiked.  Across the board, they added about a quarter-percent.

Add this quarter percent to the run-up from last week and conforming mortgage rates are now close to 0.750% higher than where they were last Monday, further evidence that how quickly the market can move.

(Image courtesy: GasBuddy.com)