Q: If there's another drop in real estate real estate prices, would that mean that interest rates will go up?
A: Interest rates tend to go down during recessionary times as the Federal Reserve lowers its federal funds rate in an attempt to stimulate economic growth. And as the demand for homes lessens and prices drop, there can be a downward pressure on interest rates.
By the time the housing market recovers, mortgage interest rates, as well as interest rates for home equity lines of credit, will likely lift off of 60-year lows and we will see inflation, to some degree, return in one way or another.
In short, a stronger housing market will often mean higher interest rates.
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