Interest rates dropped a bit recently, but here comes a reality check: High oil prices mean that interest rates must go up.
In an AP article dated may 16, 2008, by author Adam Schreck, the headline reads
Oil sets record near $128; pump price at high, too
Yes, you do see this correctly, $128 per barrel. Of course it’s just a coincidence that oil went up right before the Memorial Day Holiday (this happens every year)
The underlying problem is a weak dollar. And as long as the dollar is weak, the people with the oil will continue to want more dollars for each barrel. The Fed needs to manage the cost of oil by driving the dollar up. Unfortunately the main way that Fed raises the value of the dollar is by raising interest rates.
When interest rates go up, lenders get more conservative, and you need more money to get a loan on the same home at the same price.
It is just a matter of time before you can afford less. Do. Not. Wait.
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