Re:Federal Reserve raises rates by 0.75%
by iso1631 on Thursday June 16, 2022 @04:44AM
(#31763770)
Asset prices aren't that important on a day to day basis, what matters more is the cost.
If I have a 300k mortgage over 25 years at 7% that's $2121 a month
If I have a 500k mortgage over 25 years at 2% that's $2120 a month
The "price" doesn't really matter at that scale, it's the monthly payment, which hasn't gone up despite house prices increasing 67%
(More importantly with things constrained by zoning/land availability, the monthly price will be set to take all my spare case, as there's more demand than supply, so prices rise until the demand drops, which means people choosing not to live in that area. In other words the higher the salaries in a given area with fixed supply, the higher the cost of housing - be it mortgage or rent)
On the other hand if my weekly shop goes from $150 to $200, that's a 30% increase, and does make a difference.
If I have a 300k mortgage over 25 years at 7% that's $2121 a month
If I have a 500k mortgage over 25 years at 2% that's $2120 a month
The "price" doesn't really matter at that scale, it's the monthly payment, which hasn't gone up despite house prices increasing 67%
(More importantly with things constrained by zoning/land availability, the monthly price will be set to take all my spare case, as there's more demand than supply, so prices rise until the demand drops, which means people choosing not to live in that area. In other words the higher the salaries in a given area with fixed supply, the higher the cost of housing - be it mortgage or rent)
On the other hand if my weekly shop goes from $150 to $200, that's a 30% increase, and does make a difference.