Mortgage Rates
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If mortgage rates raise from 5% to 10%, but the expected rate of increase in house prices rises from 2% to 9%, are people more or less likely to buy houses? ( Show your work to receive full credits).
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The expert examines mortgage rates raising.
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Let us look at the math.
Imagine you have a house that you purchased for 100,000.
You have a fixed mortgage rate of 2% per year. Assume we want to pay for the house in 25 years.
Our monthly payment will be 423.46/month. At the end of the 5 year term, you will have paid paid off 16,231 so you still owe 83,769.
However, your monthly payment of 423.46 over 5 months cost you a total of 25,407.60. This ...
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