Lower Interest Rates Can Lead to Higher Home Prices, and This

question 27

Essay

Lower interest rates can lead to higher home prices, and this can lead to increased household spending since homeowners can spend this additional equity. If you were a lender, is there any danger in making loans to homeowners for this new equity or are these really risk-free loans since they are secured by the equity in the house?

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Definitions:

Archival Research

A method of research involving the analysis of existing records or archival data to find answers to research questions.

Police Records

Documents and files maintained by law enforcement agencies that detail criminal incidents, arrest records, investigative reports, and other law enforcement activities.

Confounding Variable

Variable related to an independent variable that provides an alternative explanation for the relationship between the independent and dependent variables.

Independent And Dependent Variables

Variables in an experimental setup where the independent variable is manipulated to observe its effect on the dependent variable.