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  • blindsight@beehaw.org
    2·
    2 months ago

    1. Yes. Many people budget the most they can afford in mortgage payments to identify how much to pay for a home. Lower interest rates -> lower mortgage payments per $100K -> more money they can offer for the house -> house prices go up.

    2. Not just “people”, either. Interest rates are the main cost of expanding business activity. Lower interest rates means it’s cheaper to start or expand a business.

    3. Yes. Borrowing $100K just became $500 cheaper for each year the loan is held. With interest compounding over time, this has a much bigger impact the longer the term of the loan (mortgages and business loans are the biggest and longest, generally).