When buying a home, people care about the total amount of money they will spend. They do not particularly care if the seller or the bank gets their money. If '

When buying a home, people care about the total amount of money they will spend. They do not particularly care if the seller or the bank gets their money. If 'the market' decides a property is worth 3000/month, interests rates directly impact the selling price of the home. Of course, I'm playing a trick by having the market price the monthly mortgage payment, and not price the property. Some people aren't going to take a mortgage so they care about the selling price only. But I'd argue that most people care about their monthly payment. Now compare two scenarios: You by a home for 3000/month mortgage with a high interest rate, then rates drop. You by the same home for 3000/month mortgage with a low interest rate, then they rise. In the first case, you can either refinance if you rate was fixed, or if it's adjustable your monthly payment drops. Any your home value goes up for the reason already mentioned. In the second case, if it's fixed, that's good, but you lose that rate if you sell,if its adjustable your monthly payment goes up. And your home value goes down for the reason already mentioned.