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Even more direct is the link between interest rates and house prices. Lower rates push up prices for everyone, you don't get the choice of borrowing X at a bett
by majormajor 5y ago
Even more direct is the link between interest rates and house prices. Lower rates push up prices for everyone, you don't get the choice of borrowing X at a better rate to save money every month instead of borrowing X+Y with the same payment if someone else is out there willing to pay X+Y.
It's an interesting dynamic of the more reckless moving the market for everyone and harming not just themselves, but also others, and the potential link to more money being available for lending due to inequality is very interesting indeed, because it suggests a nasty negative cycle.
- mumblemumble 5y agoI'm not even sure it's reckless. Especially with rates so low, even a fairly small absolute change in interest rates can have a huge impact on the actual price you theoretically pay for the house, which includes both principal and interest. Paying way too much at 2.75% may actually be less expensive than paying a more reasonable price at 3.25%. Meaning that, if you've got any concerns that rates might go up in the near future, you're reasonably well incentivized to get into a bidding war in order to close now instead of later.