Interest Rates Rising

We all should send our friends in England a quick email message letting them know they're not alone and we understand their pain. Here's a headline from today's Guardian Unlimited: Housing affordability in further danger if interest rates rise.

Sound familiar? Here's the lead paragraph. "Affordability for first-time buyers may be squeezed even further tomorrow if the Bank of England's monetary policy committee decides to raise interest rates again." Most of the experts quoted in the article don't think rates will go up. What I found interesting, however, is that the same cause and effect is happening in the US. Every time rates go up, we lose a certain number of otherwise marginally qualified borrowers, which means fewer buyers, which means fewer sales which means higher levels of inventory won't drop as quickly, which encourages sellers to slash prices to move inventory which hurts the overall economy. Rinse and repeat.