High interest rates directly result in higher borrowing costs, affecting affordability for buyers and influencing lenders' behavior in the real estate market.
Historically, increased interest rates have led to decreased real estate market activity, as seen in the late 1970s to early 1980s when mortgage rates reached double digits, reducing buyer affordability and transactions.
Rising interest rates reduce demand for mortgages and real estate loans, making homeownership less attainable for many and discouraging real estate investment.
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