this post was submitted on 06 Jun 2026
523 points (94.7% liked)
me_irl
7807 readers
3841 users here now
All posts need to have the same title: me_irl it is allowed to use an emoji instead of the underscore _
founded 2 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
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.