Interest rates have been a hot topic over the last 6-9 months. As rates have been increasing many buyers have become reluctant to purchase a home. Below is a great read from Ryan Niles at Cornerstone Home Lending -
WHAT DRIVES RATES?
One driver of interest rates is credit quality or risk of default. Even though underwriting can mitigate this, someone with worse credit quality has a higher chance of default. Investors will demand a higher rate of interest to compensate them for taking on the added risk of default due to poorer credit quality.
The other and more important driver of interest rates is inflation. Inflation is the archenemy of Bonds since Bonds pay investors a fixed rate of return over time.
Inflation erodes the buying power…