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  • Historically there were 3 periods during the last 40 years when interest rate increases

  • had a real and noticeable effect on house prices.

  • In 1978 to 1979 rates moved from 7 to 17% with house prices dropping 15% a year later.

  • In 1989 increases from 8% to 15% resulted in a price decline which lasted for the next

  • 6 years. The 2004 to 2007 rate rises also had a marked effect before the eventual financial

  • crash. The interesting point to note is that average

  • house price declines tend to lag a period of rate increase by about a year or so in

  • each case. But the caveat for 2016 will be how the effect of the rate rises will be felt,

  • given the sheer scale of quantitative easing that's taken place since 2009.

Historically there were 3 periods during the last 40 years when interest rate increases

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B1 US effect price interest easing interest rate lag

What happens to house prices when interest rates go up?

  • 79 12
    feng jin posted on 2016/05/06
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