While the Fed has expressed concern about the risk of inflation by tightening short term rates, there may be a plus side to rising fuel prices at the gas pump [WSJ].

And the winner is? Housing.

Foreign oil producers are investing their excess dollars in the US debt markets which is expected to keep bond yields low, thereby keeping mortgage rates down.

Does this mean we will see housing prices rise at the same torrid pace this year like we have seen over the past few years? Probably not. The supply of housing has been rising and affordability has been tested as lenders pare back on higher risk loan products [Matrix].


Low mortgage rates have become the constant in the housing equation. Now its time to focus our attention on supply.

One Response to “Oiling The Mortgage Machine”

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