Food Prices Hurt Mortgage Repayment Rates

Print Email

Food or a roof over your head? Without food people die. Without a home, they just get wet and cold.

The rising prices of commodities like wheat, corn, and rice is driving up food prices so much that many consumers cannot buy food and pay their mortgages and home equity loans.

According to The New York Post "The money drain from high food and gas prices is causing consumers to fall behind on home-equity loans at Bank of America – at an even faster rate than the bank forecast only three weeks ago."

The news is an indication that the financial community and federal government cannot keep up with the effects of inflation. The spikes in the cost of food and fuel have become so damaging to the economic system that there may be no short-term solution to the problem. The government cannot get more money to consumers quickly and reductions in Fed rates are not being passed by banks to their customers. They would rather use the money to improve balance sheets.

It may take the government several years to balance the supply and demand of key agricultural commodities and it may not be something that can be done at all. Look at the price of oil. OPEC is not listening to requests from Western countries for the cartel to increase production.

The recession has now become one driven by higher prices creating worse credit problems. People cannot pay Peter and Paul. It may be a puzzle beyond solving.

Douglas A. McIntyre