[yold__]

Consumers are cashflow (payment) driven.

Assuming a $1500 / month payment at 1999 interest rates (8%) gets you 200K in principal. Assuming a 4% (even though it more like 3%) gets you 315K today in principal. Same payment, but instead of paying interest to the bank, you pay more into equity.

As an aside, inflation rates were quite similar in 1999 as they are today. So I think the interest rates are a fair comparison (i.e. Fisher hypothesis).

Rising interest rates might have a similar effect in the housing market as with the bond market (bonds issued at lower interest rates trade at a discount), but my suspicion is that house prices are more "sticky" than bonds.