It 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 pr

It 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.