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Do you have a source for this? Huge loans at very low rates? The current is about 3.85% even for an FHA loan. Even then they won't loan you huge amounts unless
by Simulacra 9y ago
Do you have a source for this? Huge loans at very low rates? The current is about 3.85% even for an FHA loan. Even then they won't loan you huge amounts unless you have the income to justify it. Even if interest rates were allowed to "creep up" the government will not stop guaranteeing loans, and banks won't stop lending. They'll find some other way to offset. With higher interest comes higher payments which means only higher income people will be able to afford that housing. That will horribly exacerbate the problem. Now the middle and low income people don't even have a prayer of owning a home. Is that your intention?
- zaroth 9y agoIt turns out people buy generally the most home they can afford, and this is in terms of monthly payment. As interest rates increase, demand falls for higher priced homes and the new equilibrium price ends up hitting just about the same monthly payment as you had before. Low interest rates have the same effect in reverse. Prices adjust so that regardless of interest rate your monthly payment is about the same, but low rates do transfer huge wealth to existing homeowners. As down payments have come down over time this is only more pronounced. From 50% down with a 5 year term in the early 1900s to peak-mortgage 5% down 50 year terms a few years ago.