Mortgage rates Question?

Question

If mortgage rates rise from 5% to 10% but the expected rate of increase in housing prices rises from 2% to 9%, are people more or less likely to buy houses? ...

Answer 1

The answer to your homework question is more likely.

The rate spread decreases (5% on mortgage vs. 2% appreciation is a 3% spread and 10% on a mortgage and 9% appreciation is a 1% spread).

This should make the purchase look more attractive.

Answer 2

I would be more likely to buy a house. A higher rate would not scare me away if the price of the house is rising quickly. You can refinance later and the equity in the house would rise very quickly at 9%.

Answer 3

i assume you're conversing suitable to the marketplace costs for brand spanking new mortgages. a metamorphosis of the best value would not have a right away impact on the present value of mortgages. The best value ties in extra heavily to the fast term bond marketplace, that's plenty extra volitile than the long term marketplace. mortgage costs are tied nearer to the long term bond marketplace, yet there are different aspects at paintings additionally, such because of the fact the present inflation value (which permits our costs precise now because of the fact that is been low), opposition from lenders (who're being extra careful with the upward push in defaulted loans), and the inventory marketplace (inspite of the reality that still no longer at as quickly as). Any exchange that grow to be going to ensue because of the reducing of the cost had already befell because of the fact the cost exchange grow to be expected and the marketplace had already adjusted for it. If it grow to be envisioned to alter and then it did no longer, then you definately are growing to be to be seen some bond marketplace alterations, however the non-public loan costs continuously take days, even weeks, to "seize up" to the alterations in the bond markets. in case you had locked in a cost already, it does no longer matter besides. in case you have been waiting to fasten in a cost, hoping they could pass down, then you definately might get a small downward bump in the subsequent week or so, yet having pronounced that, the marketplace could have accounted for the exchange already (like I pronounced above) and the backside costs could already be obtainable.

Answer 4

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Answer 5

depends on what area you are talking about, how well the economy is doing... if people are making money they will buy homes even when rates and prices are up.... they will just be more likely to buy less expensive homes. http://www.choicerealestate.net/

Answer 6

frankly ,i would buy a few houses.you can refi later and the equity would rise at about 10%.

Answer 7

Not. I won't.