The United States weathered a sharp decline in the stock market just a few years ago, in large part because of the housing market's strength. But a sharp rise in interest rates would literally hit home. For new home buyers, or for people with adjustable rate mortgages, 200 extra basis points of interest on a $400,000 mortgage would represent $8,000 a year in extra payments. If mortgage rates were to rise sharply, housing prices would level off and perhaps do the unthinkable: fall.
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