Mortgage Rate Mayhem Oil's Impact on Homebuying

The Oil Inferno and Our Wallets

Well folks if you thought surviving the arena was tough try navigating the current mortgage market. Seems like those Gamemakers in… *ahem* certain unnamed powerful entities are at it again this time with oil prices. Interest rates are creeping up like Careers stalking tributes and suddenly that dream home feels as far away as District 12. As of Thursday the average rate for a 30 year fixed rate mortgage is 6.35% according to Mortgage News Daily. Two weeks earlier it was 5.99%. Remember when Haymitch said "That's how you come back from the dead?" Maybe he was talking about the housing market because it feels like we're constantly clawing our way back.

Blame the Middle East

Apparently the conflict in the Middle East is the real Mockingjay here stirring up trouble for everyone. "Oil drives inflation and inflation drives rates," some expert said. Honestly it sounds like something President Snow would cook up – a perfect storm to keep us all scrambling. Brent crude a global oil price benchmark traded as high as $119.50 per barrel on Monday up from about $70 before the U.S. Israeli military strikes. "The Iran conflict — that's a major headwind" for mortgage rates. It feels a bit like being stuck in the arena not knowing where the next danger is coming from. But hey at least we're not fighting each other for bread… yet. Speaking of tangled webs the situation reminds me of the article Tangled Webs US China Tug of War Snares Chile where the US and China tug of war has implications for international trade and global economic stability. Similarly this mortgage situation demonstrates how global events have an impact to us.

Don't Let the Gamemakers Win

But fear not fellow District members! There are ways to fight back. Turns out lenders might offer a "float down" provision. It gives you the right to an improved terms if rates drop. It is like finding a sponsor in the arena a glimmer of hope when you least expect it. Alternatively you can let the rate "float." Just remember with great reward comes great risk. It's a gamble but isn't everything in life a gamble? As Peeta always said "Hope it is the only thing stronger than fear."

Affordability: A Glimmer of Hope

Here's a piece of good news something rarer than a mockingjay in District 12 affordability is slowly improving. Home prices aren't skyrocketing like they used to. "Housing affordability is dependent on mortgage rates but also home prices," some economist said. It's not a complete victory but it's a start. We are seeing more inventory so buyers have more choices. And homes are staying on the market longer so buyers have more buying power than a year ago.

Know Your Odds Know Your Lender

So what's the strategy? First understand how rates can change. When you get preapproved "lock in" the interest rate. But ask your lender "If I lock now and rates get better what are my options?" Knowledge is power people. It's the difference between surviving and becoming foxface. As of February based on a $401,800 single family home and a 6.12% mortgage rate buyers would need an income of $93,696 to qualify for a mortgage according to the NAR's affordability index. It is a lower figure than last year.

May the Odds Be Ever in Your Favor

Look I'm no financial advisor. I'm just a girl who blew up the arena twice. But if there's one thing I've learned it's that you have to fight for what you want. So do your research talk to lenders and don't let those Capitol… *ahem* powerful entities dictate your future. And remember even in the darkest of times there's always hope. Because as long as we remember who we are and what we stand for we can survive anything. "If we burn you burn with us" I always say.