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Expect the Fed to increase short term rates through January, at least.

Additionally, in order for a borrower to qualify for a loan, there are debt-to-income ratios that have to be met. The higher the payment, the harder the qualifying. As those ratios rise, they exert negative pressure on housing prices. A $200,000 seller has to reduce his home price by $10,000 to drive the payment at 7% down to where it was at 6.5%. A $150,000 home has to be discounted to $142,500. Per $10,000 of home value, a .5% rise in mortgage interest rates strips $500 off the price of the house. The rise in interest rates from 5.75% in June to 6.25% has cost homeowners $500 for every $10,000 of value in their home.

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