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> The only thing the interest rate determines is who gets the money - the seller or the bank. It seems here like you've forgotten that even though your payment

> The only thing the interest rate determines is who gets the money - the seller or the bank. It seems here like you've forgotten that even though your payment may not vary, what you get will (e.g. will it be further out, smaller, apartment not house, worse neighbourhood)... Or, ultimately, at the bottom end, your 'maximum monthly payment' isn't enough to buy at all so you rent forever (London, for anyone who isn't in a well paying field). Consider - you'll probably be working 8 hours a week. For various reasons we settle on roughly that. But some people get paid very well and others don't. That matters regardless of whether everyone works 8 hours a week because most people don't retire early even if they could.

robocat 8y ago
> isn't enough to buy at all so you rent forever And landlords are willing to get a mortgage that can be paid for by the rent (modulo speculation). "you'll probably be working 8 hours a week" - what?
- esotericn 8y ago
  The last bit is an analogy. The idea that your payment is fixed and so the only thing that varies is the proportion allocated to different external parties makes no sense, because you're not buying the same thing. People don't look at a house and say "I want that" and buy it. They look within their maximum payment range. What exists within that range is hugely influenced by external factors. The analogy with an 8h work week would be that everyone 'pays' 8 hours a day for their free time so every other factor is irrelevant. Of course it's not; the particular job you end up with for your 8 hours (influenced both by your personal skill but also the external market) has a massive impact on your QoL.
simonh 8y ago
I don’t think the poster is forgetting anything, just pointing out that the amount of money going into the housing market and bidding up house prices is directly based on interest rates.

robocat 8y ago

> isn't enough to buy at all so you rent forever And landlords are willing to get a mortgage that can be paid for by the rent (modulo speculation). "you'll probably be working 8 hours a week" - what?

esotericn 8y ago
The last bit is an analogy. The idea that your payment is fixed and so the only thing that varies is the proportion allocated to different external parties makes no sense, because you're not buying the same thing. People don't look at a house and say "I want that" and buy it. They look within their maximum payment range. What exists within that range is hugely influenced by external factors. The analogy with an 8h work week would be that everyone 'pays' 8 hours a day for their free time so every other factor is irrelevant. Of course it's not; the particular job you end up with for your 8 hours (influenced both by your personal skill but also the external market) has a massive impact on your QoL.

simonh 8y ago

I don’t think the poster is forgetting anything, just pointing out that the amount of money going into the housing market and bidding up house prices is directly based on interest rates.