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Comment by leemelone | Hacker News Reader

I'm floored that people are willing to keep accumulating debt at these rates. I have a feeling it can't go on much longer...

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For things like mortgages, they're still historically low(ish). See the graph on this page for instance

https://www.bankrate.com/mortgages/historical-mortgage-rates...

so folks have been taking on debt at current rates, and substantially higher ones, for some time.

Home prices in the '80s were ~$60,000; equivalent homes now are about 10x that [0]. With inflation bouncing around 2-6% on average [1], and only modest wage increases over decades [2], that makes the median home today way less affordable even with these relatively low interest rates.

[0]: https://fred.stlouisfed.org/series/MSPUS

[1]: https://tradingeconomics.com/united-states/inflation-cpi

[2]: https://fred.stlouisfed.org/series/CES0500000003

All 4 of my children, in various stages of degreedness, have told me they have no hope of ever owning a home of their own like they were able to grow up in.

I wonder if there is a metric tracking # of homes owned by <30 year olds compared to # of homes owned by <60 year olds.

Even at current interest rates, the prices are quite nuts.

Homeownership by age demographic has been surprisingly stable over the past 20 years.

https://www.census.gov/housing/hvs/data/charts/fig07.pdf

True, but home prices are also much higher than in the past partly thanks to that long period of low interest rates. Taking on these huge loans with corresponding (comparatively) high rates is a different ballgame than it was in the past.

Half of the federal govt's $31 trillion debt comes due in the next two years. It will be refinanced at much higher rates...Or we'll see Yield Curve Control from the federal reserve. Take your pick.

These aren't the exact rates that ordinary folks will be borrowing at. See credit cards for instance (way higher), or mortgages (a little higher).

Counterintuitively, it is possible for mortgage rates to go down even when the Feds are raising their rates. The interest rates for us normies are dictated in large part to how confident the financial sector feels. If the Fed's raising of the interest rate makes the financial sector feel that inflation is under control, then mortgage rates may go down.

Right but it won’t go below the fed’s rate which is already huge for the prices of housing these days anyway.

From https://en.wikipedia.org/wiki/Early_1980s_recession:

"The federal funds rate, which was about 11% in 1979, rose to 20% by June 1981. The prime interest rate, an important economic measure, eventually reached 21.5% in June 1982"

It doesn't really matter what rates were in the early 80s.

We're adjusted to the ZIRP rates from 2008-2021. Unprofitable business ventures that were kicking the can down the road rolling over cheap short term borrowing should go broke as their borrowing rates adjust higher. And sectors like commercial real estate are getting squeezed by remote work and online shopping, raising their borrowing rates should accelerate their failure.

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