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How Gas Prices Are Impacting Mortgage Rates

2008
03.11

Gasoline prices reached an all-time, inflation-adjusted high yesterday, averaging $3.23 per gallon nationwide.

According to GasBuddy.com, this represents a 25% increase in the last 12 months.

Higher gas prices are leaving Americans with fewer discretionary dollars to spend and that is playing a role in the U.S. economy’s slowdown. It’s one reason why mortgage rates have stayed low despite steady upside pressure from inflation.

High gas prices are also a reason why Thursday’s Retail Sales data will be closely watched; markets will gain insight into whether Americans are cutting back on personal spending because of rising energy costs.

Retail Sales are expected to have risen by a slight 0.1%. If the actual number is lower, mortgage rates should fall on recession fears. If it’s higher, rates should rise.

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