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I can't imagine rising mortgage rates won't affect home prices. It's simple math. If you get a 240k mortgage at 3% vs 5.8% you're looking at a payment increase

• BizarroLand 4y ago
  I was planning on refinancing my home that I purchased at the end of 2020. It's gone from ~$500k to ~$750k since I bought it, but adding an extra 25% ($125k) to the mortgage (bringing it from currently $470k to ~$600k) would increase my monthly payments by 50%. It's actually ~$200/m cheaper for me to take out an 8% $125k loan separate from my mortgage than it is to refinance the bulk from 2.75% to 5.2%.
  • bko 4y ago
    That makes sense. Also much better because you can pay off that higher rate one first and your overall payment would go down.
• rufus_foreman 4y ago
  That sounds like common sense, but it isn't the way things have happened in the past, at least if you are talking about nominal home prices. From what I've read there's no example in recent history of nominal house prices falling during a period of rising interest rates. If you're talking about real home prices they might fall. If inflation is 10% and house prices go up by 5%, they're falling in real terms. But people don't want to, and sometimes financially are unable to, sell a house for less than they paid for it. Where's the inventory going to come from if people are underwater on their loans and won't sell? New construction. What happens to new construction when interest rates skyrocket? It grinds to a halt. I mean that's what the Fed is doing, on purpose, to kill inflation.