Since we are in the process of Building Our House, I have had a keen interest in mortgage rates as of late. When we first started this whole process, the rates in my area for a 30 year fixed mortgage were hovering around 5.625%. Recently, however, the rates are up to 6.25%. That's a substantial increase in the past 3 months. Knowing that the Federal Reserve Board did not raise rates at their last meeting, I thought back over the past three months to determine the culprit.

What has changed over the last three months? One major thing that I can think of is a major spike in gas prices. Could there possibly be a correlation between the two? As costs of gas goes up, the consumer price index (a major indicator of inflation) goes up as well. This is because gas and transportation costs are built in to a lot of products. When inflation goes up, financial institutions (usually in response to the Federal Reserve Board) raise rates which put strain on people's spending. By decreasing spending, inflation can be held in check or reversed. Sounds like gas and mortgage rates could be linked right?

I took a look at a graph of gas prices over the past 3 months and a graph of mortgage rates over the same time period. Low and behold, they go up in unison.

This may or may not be correlation. Or it may be a weak correlation. More study would be required to determine if the two are linked, but for my very basic examination, there appears that there could be something there.