The higher the interest rate, the more expensive your monthly mortgage payment will be.
We'll compare the prices of homes at the beginning of 2022 when the interest rates were 3% versus at the end of 2022 when they rose to 7%.
For a $400,000 home, with a 20% down payment, 2% closing costs, and a 30-year fixed mortgage at 3%, your monthly payment (principal and interest only) would be $1,350 per month.
But at a 7% interest rate, that same home would have a monthly payment of $2,130, an increase of $780 per month (58% increase).
If we achieve a 5% interest rate and the home that's currently priced at $400,000 drops to $320,000, a monthly mortgage payment at 20% down would make the monthly payment $1375. That's significant savings and allows more potential homebuyers to afford a home. (Or at least keep the same affordability vs a 3% interest rate).
https://flatfeemlshouston.net/shocking-comparison-of-3-vs-7-interest-rates/