[jf271]

I bought my first house in 1984. Banks were begging you to take out a mortgage and prices were in the tank. I bought the house with 5% down, PMI and a 14 percent, 1 year adjustable mortgage (interest rates were so high they had to go down). When rates went down property values soared and I was able to use the gain to finance most of the purchase of my next house.

My advice is take advantage of the low interest rates if you can. You have to live somewhere and the mortgage payments are a form of forced savings and partially subsidized by the US government.

[mattmiller]

Your example is the opposite of the current situation. If we assume that home prices are determined by monthly payment then that would explain why the price increased as rates dropped.

Then you had a low price to rent compared to payment to rent ratios. Today you have the opposite: low payment to rent and high price to rent ratios. If rates rise with prices drop?