Lower interest rates from 2000 to 2005 caused housing prices to increase as demand rose. Housing supply was limited, exacerbating the price increases. When interest rates began rising in 2005, demand for housing fell and prices decreased as the equilibrium between supply and demand shifted to accommodate higher interest rates and slower demand.

1. SYNDICATE 5
Interest Rate and Housing
M.Ridwan - 29112555
Machadi Dhana – 29112303
M. Khadafi – 29112324
Pedro Putu Wirya – 29112565
Seto Kusparyanti – 29112306
Yuliani Dewi – 29112321
Rahdianto Maulana - 29112554

2. Problem Statement
During 2000 until 2005, interest rate of fixed rate mortgage had
fell from 8.5% to 6%. The decreasing interest rate impacted to the
price of housing.
Due to limited supply of new housing, then the housing price
start to increase.
But when interest rate start to rise in 2005, then the demand of
housing begin to fall, and impacted also to the price of housing

3. Theoretical Explanantion
 Supply and demand graph
Due to the decreasing of interest rate of fixed rate
mortgage, then the price of housing began to decline.
Based on the graphic, if the price is decline, then the
demand become higher, which lead to increasing price.
And when the interest rate start to increase, then the total
price of housing become more expensive, which lead to
slower demand. This eventually bring the equilibrium
shift to the right, where finally the price become lower.