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.
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.
