So what's going to happen when Lagarde decides to lower them? The demand is way to high and the offer is almost non existent.
And it seems that it didn't affect the inflation either. Bad years for everybody who's not getting a 10% raise every year.
This is a side effect of "demand" I think.
Higher interest rates increase mortgage/financing costs. This is supposed to "destroy" demand.
Except, there's so much demand (and so little supply) that it didn't, and we're getting the worst of both worlds.
In the US: A $500k 3/2 house at 2.75% 30-year fixed in 2020 is now $750k at 6.75%
It "shouldn't" have played out that way but my theory is
Home buyers from before ~2015 (random guess) are "up so much" in equity from this quiet "real estate inflation/demand appreciation boom" that they don't care to "overpay" $200k compared to what they would've paid 4 years ago because they were "gifted/given" $200k+ in equity out of the sky. They're just moving the money from one property to the next.
Maybe a bit harder to sell but still they seem to sell. And everybody seems to expect interest rates to decrease soon, which will lead into even higher rise.
But what do you expect - people in Europe generally dont use / trust / understand stock market, and real estate at least in past 5-6 decades was by far the best investment for common folks. Stuff they understand, can use, can physically see and hold.
Plus in at least a bit touristy locations airbnb is helping massively with mortgage payments, and before 'communists' here come again with 'eat the greedy rich because we want our own houses too' - the demand from travellers is there, in past few years massive (and often hotels are simply not good enough for ie families with small kids while being 2-3x more expensive).