When mortgage interest rates drop, it generally leads to an increase in home prices. This is because lower interest rates reduce the cost of borrowing, making mortgages more affordable for potential buyers. As a result, more people can enter the housing market, increasing demand. Higher demand, coupled with a relatively fixed supply of homes, often leads to higher home prices.
However, the relationship between interest rates and home prices can be influenced by other factors, such as the overall economy, local housing market conditions, and changes in supply. While lower interest rates usually stimulate demand and push prices up, the exact impact can vary based on these other factors.
