With oil prices near 4+ year lows, many rate-watchers are pondering what that means for mortgage rates.
The reality is it's a complex relationship. Oil price moves aren't “good” or “bad” in a consistent way.
Whether oil causes monthly payments to shrink or swell boils down to a trio of factors:
- How high or low oil prices are
- Why oil prices moved (e.g., global demand boom vs. supply shock vs recession)
- Whether there's an inflation and/or a monetary policy response.
Below, we detail how to think about multi-year highs or lows in crude—like the ones we're seeing today.
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