How do rising interest rates affect mortgages?

Rising interest rates directly impact mortgage costs, especially for new buyers or those with variable-rate loans. As rates increase, the cost of borrowing goes up, meaning higher monthly payments for the same loan amount. This can reduce affordability, limit how much buyers can borrow, and cool down housing markets. Existing homeowners with fixed-rate mortgages are less affected, but refinancing becomes more expensive. For adjustable-rate mortgages, payments can increase significantly when rates reset. Higher interest rates can also affect home prices, as demand may decrease due to affordability issues. Overall, rising rates make mortgages more expensive, reduce buyer power, and influence long-term real estate investment strategies and household budgeting.