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In that scenario, the bank's profits wouldn't change so why would that affect the stock and his pay?

He’s not a banker. He’s a real estate agent.

This is largely a zero-sum game: if the bank is taking more money out of the transaction, sellers (and their agents who work for a percentage of the selling price) will be taking less. It’s not like buyers can magically afford to pay the same principal as before plus new higher interest rates.

This assumes that most people spend the absolute most they can afford for their home purchase. The question is going to be how often is that actually the case?

More often than not? That's why auto dealerships talk about the monthly payment not the sale price. A majority of Americans are consistently maxed out on all types of debt with Covid resetting that a bit but those savings are rapidly depleting.

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