Economic Question! how does a rise in interest rate lead to a fall in house prices?
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Re: Economic Question! how does a rise in interest rate lead to a fall in house pricehttp://www.investopedia.com/articles...#axzz1uDw9fxbn
Sums it up quite nicely. -
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Re: Economic Question! how does a rise in interest rate lead to a fall in house priceIn a nutshell:
Interest Rates Rise cause a higher cost to loans.
Less Loans taken out
Less loans used to buy houses
Demand for houses drop
Therefore prices drop(simple law of supply and demand) -
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Re: Economic Question! how does a rise in interest rate lead to a fall in house priceI believe the correct term to use is that mortgages become more expensive, not loans as that could refer to anything(Original post by Jonty007)
In a nutshell:
Interest Rates Rise cause a higher cost to loans.
Less Loans taken out
Less loans used to buy houses
Demand for houses drop
Therefore prices drop(simple law of supply and demand)
