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> 1. People have mortgages with very low interest rates. If they sell the home, they give up that cheap mortgage for a much higher mortgage interest rate with the next home. So, they stay.

This may be true only in the US. In Canada, for example, the maximum term a mortgage rate is fixed for is 5 years, after which you have to "renew" your mortgage and renegotiate the rate. So a lot of people are already being forced into higher interest mortgages here.

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In the UK most owner-occupiers don't even have a mortgage. Of those that do, the majority took the mortgage out 15+ years ago when prices were far lower as a percentage of current wages, and thus higher interest rates don't really make it terrible.

The people who suffer are those who bought 5 years ago -- prices going down means negative equity so you can't sell and move to a cheaper place, and you reach the end of your 5 year fix.

That said, wages have increased a lot over the last 5 years, so higher rates aren't the end of the world. My mortgage increased last year by about 25%, but as average wages are up at least that much that's not devestating.

let us all remember the US is special. The government buys all mortgages -kind of- and that's what makes it possible and cheap to get 30 year fixed rates.

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