To put it simply, the decline will reduce the cost of business investment and household consumption, which will promote the growth of investment and consumption, which will support the prices of assets such as stocks and real estate. At the same time, it will cause changes and affect the import and export of the United States.
So in a recession, lower interest rates to support growth;
In turn, when the economy overheats, the Fed raises interest rates to discourage investment and consumption.
The federal reserve to increase interest rates also represents the austerity, would increase the cost of bank loans, bank loans after cost of firms and households will there will be a certain decline, thus reduce enterprise business investment and household consumption and investment lead to slow economic growth, in this case the housing mortgage rates will also be increased with the level of market interest rates overall.
Therefore, the buyers can only afford a relatively small loan, resulting in the development of the real estate industry slowed down.
