Which of these events would most likely lead to a rise in interest rates for home mortgages?
(1 point)
Responses
The prices of homes for sale in a certain city rise by a great deal.
The prices of homes for sale in a certain city rise by a great deal.
Many new lenders begin offering home mortgages.
Many new lenders begin offering home mortgages.
Home sales increase greatly for several months in a row.
Home sales increase greatly for several months in a row.
The average time needed to sell a house doubles.
The correct answer is: (3) The average time needed to sell a house doubles.
When the average time needed to sell a house doubles, it suggests that the demand for homes is decreasing. This decrease in demand can lead to a decrease in home prices, which may prompt lenders to raise interest rates to compensate for the potential decrease in returns on mortgage loans.