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Comment by dalyons | Hacker News Reader

Yeah I think the HN crowd is vastly overestimating how much people care about rates. Most people are not perfect financial optimizers - they’ll just pay whatever they can maximally afford per month for a house that most closely matches what they need for their present life. Few people are coldly rate rational. You only have to look at what people pay for car loans to confirm this.

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They care about what they can afford each month. They indirectly care about the rate. The sign on the starter home neighborhood near me was $719/mo when I moved here in 2020. It crept up to 850, 970, 1100, and then they changed the sign to not have that information. Same houses.

Hopefully only sane mortgage products continue to be used so it doesn’t end up like automobile loans. Aren’t most car loans 72 months now? That’s what is required to get the monthly note affordable for most buyers.

It’s not about optimizing it’s about cash flow. If you get a 500k mortgage today at the current rate of ~7% your monthly payment is about 3500/mo. That same mortgage financed 2 years ago around ~2% is a monthly payment of 1800. For the SAME house you are paying basically double the amount per month. This isn’t optimizing a few bucks per month it’s about not being able to afford the same house.

Every homeowner knows this and if they’ve ever had the incling to move int rh last year theyve done the math and realize it simply doesn’t make sense. People won’t move right now unless life forces them to.

And I think this type of opinion goes too far in the other direction and essentially accuses the common person of being a complete ignoramus.

> they’ll just pay whatever they can maximally afford per month for a house that most closely matches what they need for their present life

Right, and if you ditch a 3% mortgage in favor of a 6% mortgage your monthly spend goes way less far. You're looking at a loan payment that increases by about 40%.

Right, and further not being perfectly financially rational is quite fine! Finances aren’t the only factor in any decision, nor do they need to be the primary factor.

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