With oil prices currently hovering around $95 per barrel, the repercussions are trickling down to the average consumer’s wallet when it comes to filling up their vehicles. The price of regular unleaded gasoline has experienced a significant surge in the past month, reaching an average of $3.85 per gallon at the national level.
This surge has raised concerns in financial markets, as it is expected to keep the Federal Reserve committed to maintaining higher interest rates for an extended period.
On Monday, the yield on the 10-year Treasury bond crossed the 4.5% threshold, a level not witnessed since 2007. This increase in Treasury yields has also had a ripple effect on mortgage rates, causing them to climb upwards. Consequently, the cost of financing a home purchase over a 30-year period has soared to nearly 8%.
Meanwhile, the real estate market continues to witness housing prices hovering near historic highs. This situation has exacerbated an already dire affordability crisis, compelling potential homebuyers to remain on the sidelines. According to the Mortgage Bankers Association, its purchase index has plummeted from 350 in late 2021 to a mere 141 this past summer, marking a staggering decline of approximately 60%.
The rising Treasury rates are not only affecting the housing market but also impacting financing options for purchasing a new car. Auto loans are currently carrying an average interest rate of about 10%. In the face of several years of elevated inflation, some consumers are finding themselves compelled to resort to credit cards for financing, with outstanding balances being subjected to the highest interest rates ever recorded.
