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Lower mortgage rates. If your mortgage goes from 5% to 4% your monthly discretionary income can increase markedly. If you spend it then, boom, increased consume
by cmdkeen 13y ago
Lower mortgage rates. If your mortgage goes from 5% to 4% your monthly discretionary income can increase markedly. If you spend it then, boom, increased consumer demand.
- VLM 13y agoLOL no all it means is the sales price goes up. Harry HowMuchAMonth can pay $2K/month on his mortgage, and that's exactly how much he WILL spend regardless of interest rates. All the interest rate controls is how big of a check the former owners will get. Although your reaction mechanism is wrong, the end result is the same, although the former owners are likely to roll their immense check into their new real estate purchase, eventually, at the far end, as people move into nursing homes or whatever, they DO cash out and those guys spend the "gains". One problem is I don't know if $5K/month nursing homes are considered discretionary consumer spending. There are also people who cash out refinance, and spend it on jet skis and Harleys. That works great at long as real estate prices only go up, regardless of personal income declining.