Neutral for buyers? Absolutely not.

As a buyer you rather want to take out a loan in a high interest rate environment than a low interest rate environment, given that the monthly payment is the same.

1000 usd extra paid towards your mortgage actually makes a difference when the rate is 15% compared to when it is 1.5%

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EPWN3D 7 hours ago | parent | next [-]

There's also "date the rate, marry the price". If you're a buyer and think that rates are going to come down within a couple of years, you can lock in the lower price of your home for property tax purposes and then refinance when rates are lower.

But a lot of people bought in 2024 expecting that to happen.

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iamnothere 7 hours ago | parent | prev | next [-]

Only if you expect rates to come down in the future. If the monthly payment is the same, I guess you have a slightly bigger mortgage interest deduction for tax purposes, but you’re still paying the same amount each month.

If you expect rates to come down soon, you can plan to refinance in the future, but that’s a gamble. Rates may not go down, or the value of the house could go down before you refinance, which may make refinancing more expensive depending on how much you owe.

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bluGill 7 hours ago | parent | prev | next [-]

The question is what will rates do in the future. If rates go down you refinance, if they go up even more you hold your rates. Either way so you are fine long term, but it can be 10 years before it pays off.

Note that the US mostly does fixed rate for life of the loan. Many countries only have ARM (adjustable rates), and those exist in the US as well. If you have an ARM that changes things greatly.

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iamflimflam1 7 hours ago | parent | prev [-]

This really doesn’t make sense.

Higher interest rates mean the monthly payment is higher. You need to pay back the principal + the interest.

	▲	bluGill 6 hours ago \| parent [-]
		He assumed that the payment is the same meaning the principal for the same house went down and so this is neutral. If your payment is the same it doesn't matter what is principal vs interest. In the best cases rates go down in the future and then you refinance and your payment goes way down. House prices tend to be "sticky", so that assumption is probably wrong. People who own a house often cannot afford to sell for the current value since it won't pay off their loan and leave enough money left over for a replacement house so they avoid moving. Eventually things get bad enough that they "sell short", but that takes a credit hit so you don't want to do that until the loss is large (and in turn you gain more).