Econ Question, housing prices/mortgage rates?
I answered the question but i'm not sure if my answer is fully correct or if i need more information
Here is the sound out:
You read in the newspaper the following two pieces of information: First, mortgage rates rise from 6% to 8% and second, the expected rate of increase surrounded by housing prices rises from 4% to 8%. Do you think this news can affect people's decision on buying houses? How and why?
Answer:
Im thinking that this news will negatively effect people to buy houses becuse houses will be more expensive and the cost of maintain the house will also require more funds. However, I don't really know if it can positively effect people as well because since housing prices progress up, there is a greater rate of return on the house (i'm not sure if I got this right).
Can you convey me if I said something that was off or I can incorporate something to my argument. Thanks xD
Answers:
If this news gives unadulterated interest rates then in short-run family will buy less houses (if they don't expect interest rates to rise further). But it's consequence of fall contained by supply (houses will be sold for higher prices) on demand-supply graph and fall surrounded by demand (higher housing costs).
In case if word gives you nominal rates then conclusion may depend on associates nominal income expectations or inflation rate.
Related Questions:
What are the name of companies that volunteer fixed rate mortgages?
for home owners with bad credit? All companies will offer fixed rates but beside bad credit your fixed rate will be higher consequently someone with good credit. You are a risk. Good luck finding any kind of mortgage right immediately, if you...
Here is the sound out:
You read in the newspaper the following two pieces of information: First, mortgage rates rise from 6% to 8% and second, the expected rate of increase surrounded by housing prices rises from 4% to 8%. Do you think this news can affect people's decision on buying houses? How and why?
Answer:
Im thinking that this news will negatively effect people to buy houses becuse houses will be more expensive and the cost of maintain the house will also require more funds. However, I don't really know if it can positively effect people as well because since housing prices progress up, there is a greater rate of return on the house (i'm not sure if I got this right).
Can you convey me if I said something that was off or I can incorporate something to my argument. Thanks xD
Answers:
If this news gives unadulterated interest rates then in short-run family will buy less houses (if they don't expect interest rates to rise further). But it's consequence of fall contained by supply (houses will be sold for higher prices) on demand-supply graph and fall surrounded by demand (higher housing costs).
In case if word gives you nominal rates then conclusion may depend on associates nominal income expectations or inflation rate.
Related Questions:
What are the name of companies that volunteer fixed rate mortgages?
for home owners with bad credit? All companies will offer fixed rates but beside bad credit your fixed rate will be higher consequently someone with good credit. You are a risk. Good luck finding any kind of mortgage right immediately, if you...