Brad Hein

Will Increasing Mortgage Rates Impact Home Prices? There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases. However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased. Here is a graph showing what actually happened: Last week, in an article titled “ Higher Rates, Don’t Mean Lower House Prices After All, ”  the  Wall Street Journal  revealed that a recent study by  John Burns Real Estate Consulting Inc.  found that: “[P]rice weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job grow...