Mortgage Rates Soar as Oil Prices Surge, Impacting Homebuyers

1:03 AM ETDeveloping

Business Desk

In Short: Mortgage rates have risen sharply as oil prices climb, affecting homebuyers and the housing market, according to reports.

Oil prices have surged, leading to a rise in mortgage rates. Multiple banks, including Halifax, Santander, HSBC, and Nationwide, have increased their mortgage rates or announced plans to do so. Nationwide is raising its rates by up to 0.3 percentage points, while HSBC and Santander will increase their rates on Wednesday. Halifax, Britain’s largest lender, will raise its rates by up to 0.18 percentage points, marking its second increase in a week.

Avelo Airlines CEO Andrew Levy and Ryanair CEO Michael O'Leary both highlighted the impact of higher fuel prices on the airline industry, with O'Leary predicting significant airfare increases if oil prices remain elevated. Levy noted that Avelo will likely pass some of these costs onto customers.

The rise in mortgage rates has also led to a decline in mortgage applications. According to the Mortgage Bankers Association, applications fell 2.7% for the week ending Sept. 4. The average daily mortgage rate crossed the 7% threshold on Sept. 10, and analysts expect further rate hikes next week.

Economist Lawrence Yun from the National Association of Realtors stated that mortgage rates and home sales move in opposite directions, explaining the mild dip in home buying activity due to high mortgage rates. The housing market signals an increasingly buyer-friendly market heading into fall, but rising rates continue to present a significant barrier for potential homebuyers.

What's still developing

Gold prices rose in Philippines on Tuesday, according to data compiled by FXStreet.
Avelo Airlines founder and CEO Andrew Levy said surging fuel prices have climbed back to "uncomfortably high" levels, creating cost pressures for the ultra-low-cost carrier and raising the prospect the airline will have to pass some of those costs on to travelers.
In an interview with FOX Business, Levy said higher fuel prices tied to the Iran conflict are "the latest issue" confronting the airline industry, with costs climbing sharply in recent weeks.
Avelo Airlines founder and CEO Andrew Levy told FOX Business that surging fuel prices have climbed back to "uncomfortably high" levels. (FOX Business) Levy, who previously co-founded Allegiant Air and later served as chief financial officer of United Airlines, said Avelo will ultimately have to pass at least some of those higher costs on to customers.
The rise came on the same day that financial markets predicted significantly higher odds of a Federal Reserve short-term rate hike next week.
A Treasury Department buyback intended to push rates lower appeared to backfire Wednesday.

Sources

RealEstateNews.comlink