Today’s newspapers carried stories about the recent plunge in the number of mortgage applications. While interest rates have risen to only about 6.2% (a very low rate if put in the context of the past several decades), that increase has caused new mortgage applications to drop by two-thirds. Economists predict that this will cause a slight slow down in home sales and will begin to depress the value of real estate. The rationale here is that, the lower the interest rate, the more the buyer can afford to pay for a new house.
