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Comment by pbuzbee | Hacker News Reader

I struggle to reconcile this with the number of cash buyers, though. Higher rates aren't going to affect their ability to pay.

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Most cash buyers are flippers doing it with bank loans. They’re in a very vulnerable position right now. The smart ones will get out and stay out. Most are greedy.

>They’re in a very vulnerable position right now.

Why? aren't the rates locked in for the duration of the mortgage (25/30 years)? The only way I can think of this going wrong is doing your budgeting when the rate is 2.5% and then not taking the rising rates into account, but presumably the bank will cut them off first.

Flipping implies selling the homes at a profit, which is unlikely in a rising interest rate environment.

Flippers either buy with cash, or they do all interest loans, and really factor in how long they take to flip the house. Interest rates or going long on a build can really dig into profits. You can't get a 25/30 year loan on a flip as it's not your primary residence, and you're limited on the number of those you can have per year.

So I figured this out, there are now companies that will give you all cash from a loan for a fee.

Wait wat?

With a purchase mortgage the bank is involved in the transaction in multiple ways, for the bank's protection. Appraisal, inspection, etc. You're saying there is some magic wand to be waved that makes the bank not care about its exposure anymore?

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