We're betting you thought lower Long Island NY gas prices could only mean positive things for the economy, right?
If you're in the market for a home mortgage, Long Island NY gas prices could be having an effect on the rate you can get.
How Long Island NY Gas Prices Affect Mortgage Rates
Believe it or not, oil investments and Long Island NY gas prices (along with lots of other things) have an indirect effect on mortgage rates.
One of the strongest predictors of mortgage rates is the yield on a 10-year Treasury note. Basically if the yield is low, so are mortgage rates. The buying of bonds can represent relative safety for oil investors, and what oil prices mean for the world's economy.
Oil prices, as well as Long Island NY gas prices, continues to fall in large part because there is less demand. Less demand comes via weakening economies across the globe. The lower oil prices may also disproportionately affect countries like Russia, which are already suffering from instability. All of this leads to a flight to quality, and the safe haven is almost always the U.S. Bond Market.
With Long Island NY gas prices dropping and no one quite sure when or where they'll stop, U.S. bonds give investors a certain comfort that the oil market isn't currently providing. (Treasury bonds will always be paid off to prevent the government from losing the confidence of its investors and creditors at home and abroad.)
The problem for these investors is that everyone has the same idea. If everyone starts buying bonds, it drives down yields because the government doesn't have to offer such a high rate of return to get people to buy. This, in turn, drives down mortgage rates.
Some economists believe the benefit to the housing market is largely indirect in the form of more consumer spending, leading to job and income growth and ultimately making it easier for people to buy homes.
It should be noted that the 10-year Treasury note only affects the base mortgage rate. A number of factors go into the actual interest rate a homebuyer can get, including their credit score, the number of points paid on the mortgage and the down payment amount.
We'll keep you informed on Long Island NY gas prices and how the price you pay at the pump could affect your mortgage rate. In the meantime, you can get more information about factors that control Long Island NY mortgage rates in our section on Long Island NY Mortgage Info to your right under Long Island NY Real Estate Categories.
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