The Impact of Interest Rates on Mortgage Payments

When interest rates are low, the borrower pays less in interest on the money they have borrowed. This lowers their monthly payments and allows the borrower to keep more money in their pocket. If you want to find a single reason as to why home prices have sky rocketed in the last year, interest rates are it people can afford more expensive properties because rates are so much lower. Conversely, rising interest rates have the potential to hurt the housing market. Rising rates make mortgages more expensive, and in turn, properties are less affordable. Fewer buyers will be interested in purchasing a property that has a higher interest rate. Higher rates increase the debt to income ratio of the loan too.