Quote:
Originally Posted by Sylvanfan
I think you meant that with interest rates going up, the cost to the consumer goes up. The payment on a 250,000 mortgage that someone was to work out today would be higher than what it was three weeks ago, and if rates continue to trend up, so will payments. Even though the cost in absolute dollars is the same the amount buyers are paying to get that money increases.
So even if a home maintains it's current value, it's going to cost the person buying it more money based on the assumption they are going to be borrowing most of the money to buy it.
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That's exactly what I meant. A 250,000 mortgage is going to cost you more in a year than it does today. Hence the cost of house goes up without any increase in the value of the home.
Naturally this is going to reduce the demand for homes.....