this post was submitted on 06 Jun 2026
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me_irl
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I'm neither talking about sellers markets or buy vs rent.
I'll put it as short as I can: if people can borrow more, then prices will go up, because everyone needs a home, and there is a finite number of homes. You are basically fighting with everyone else who want to buy a home when you want to buy.
So if everyone can borrow more (low rates) then that doesn't give you a better house, because everyone can now bid higher too.
And the reverse when it's expensive to borrow of course.
You are talking about day to day economics, and yes I am sure you made a good choice stopping renting (economically).
But you seem to think, that in a market with very expensive loans, it's worse somehow.
If it's very expensive to borrow, the 450k house suddenly has no buyers and has to drop the price. Over time it becomes a 300k house (for example).
Are you better off with that? Yes. Not because you'll pay your bank less, but you'll pay them during a smaller time (at 12% it doesn't help taking out a 25 year loan, it doesn't make sense).
Also, as a bonus, usually when we already own, we go from less hood to better (better/bigger/more expensive) so if prices are low it's cheaper to upgrade.
And on a final note, the "450k worth", is not useful money, except if you sell it to live in a less good place (or if you have many houses) which people rarely do.
Hope it clears it up a bit!
People cannot suddenly borrow more, not in the US. That is just not how it works here. The amount you can borrow is decided by income and credit score. Interest rates do not affect the loan durations you have available, you can always decide to get 10, 15, or 30 year fixed. Yes, 10 and 15 have higher monthly payments, but if your income fits, you can always get them, regardless of interest rate.
Of course they can.
If suddenly it's at 12% then you can borrow less (or you live in some place where mathematics does not apply), and conversely if it drops from 12 to 2 you can borrow more.
Maybe not YOU, but you as in the general population. You have just never experienced it, as you have to go back to maybe the 1980s to find those expensive loans.
All countries have laws and rules based on income and whatnot, the usa is not exceptional.
As you say, loans with interest rates that high no longer exist. But you are still incorrect with how mortgages work in the US. You absolutely cannot suddenly borrow more with lower interest rates. Once again, the amount you can borrow is based off of credit scores and income, NOT interest rates. Sure, maybe you could borrow like $25k more, maybe even $50k. But that is nothing compared to your full loan, and no bank is going to see that interest rates are low and be willing to suddenly take on more risk with little gain. What would the bank's motivation be? They gain nothing but risk by doing that, so they don't do it. They do allow for more risk when interest rates are high, because they make more money off of loans. It's the exact opposite of what you are trying to claim.
The US is exceptional here, maybe not in a good way, however, we definitely are. I don't understand why you are trying to tell me that my lived experience is wrong and that your vague and incorrect assumptions about the US mortgage market are correct.
The usa is not an exception when rates hit 12%. And they were not a long time ago. Quantitative easing made money cheap after the 2008 crash, but that's over, and cheap money is no more. So eventually rates might rise and cost per house (in inflation corrected numbers) will lower.
It's basic math.
Sure, maybe they'll hiver at 3-4-5% for 2 decades, what do I know, but that was not the discussion.
You are still assuming that rates will increase to that level.
Look at this. Interest rates haven't been as high as 12% since roughly 1987. That's more than 2 decades, and it's been almost 2 decades since 2008, where rates were already falling before the housing market crash. 2008 saw some of the lowest housing costs of the 21st century so far because of the amount of foreclosures. And yet, look at that, interest rates were around 6-7% and dropped to about 5%. Of note, the historical average is 7.70%, not the 12% you insist upon going back to.
Neither one of us know what the future holds, but taking modern economics into account shows that rates are unlikely to get high enough to have that make a meaningful difference.
Housing in the 70's and 80's wasn't cheap because of the interest rates. It was cheap because housing was rapidly expanding into suburbs, a suburbification. This is why rates could actually be that high, because the loans were comparatively smaller. You are confusing correlation and causation.
Look at this one:
Housing costs at 12% were not meaningfully cheaper. They were still slowly rising.
I do not assume that. sigh.
What I said was that if rates go up a lot, prices go down.
Edit: correct the second for inflation.
They will not go up enough to make your claim valid, full stop. It has never happened in the way you've been claiming, so you can't even point to the historical data to back yourself up, it seems.
Inflation is not something that needs to be included in this, and it only hurts your case further. Your original claim is that if interest rates go up (now you're saying "a lot", but it doesn't change anything), home prices go down.
Well, in the 80's, interest rates went way up, but housing prices didn't go down, even in the short time period where inflation isn't going to meaningfully be a factor. It went up at the a slow rate. So, you're grasping at straws now ("correct the second for inflation" even though it didn't magically make the housing prices go down in any way that matters) seemingly because you didn't understand basic econmics in the real world and dug yourself too deep.
Are you going to provide any sources for your bold claim? Any amount of data? Anything? Or are you just going to keep talking in circles and not providing anything of substance?