Will high interest rates cause a housing crash?
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The Risk of a Housing Crash
If interest rates rise more and more, there is the threat of repossessions or people just not being able to pay. There's likely to be a very large reduction in house prices because essentially people can't pay their mortgage. Most people in the country own their house that they live in. And it's their main sense of how wealthy they are. If that goes down hugely in value then people are going to feel a lot poorer. That could cause a big recession. It could cause a depression ultimately.
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