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by jfoutz 3841 days ago
Eventually. Today, of the many houses sold, there's going to be .25% more people who can't get the loan they want. They're going to move down market, and buy a slightly cheaper house. The more expensive houses might lower their price, or take it off market or whatever.

It's like a distributed system. There's a bunch of complicated moving parts that all react to each other. There aren't that many knobs and levers to pull on. The fed can't tell home sellers to lower their prices, they can just fiddle with interest rates.
1 comments
harryh 3841 days ago
> there's going to be .25% more people who can't get the loan they want.

No. This is wrong. There isn't a 1-1 correlation between interest rates and the % of people who get the loan they want. That's nuts.

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jfoutz 3841 days ago
It's a mental model to highlight a point. if there were infinite mortgage applicants, and the fed change was the only change in the whole universe, there would be a 1-1 correlation. Lots of other stuff is going on, which pushes back.
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harryh 3841 days ago
No, that's wrong too. I have no idea why you think there would be a relationship like that. The two things you're trying to relate aren't even on the same scale.
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