> 1. You often can't get a mortgage on the same terms so you often can't find equality between selling a home and buying a home.
When interest rates fall the value of the asset goes up and the cost of borrowing the same amount of money has gone down
When interest rates fall the value of the asset goes up and the cost of borrowing the same amount of money has gone down
Firstly, people can afford to pay $x for mortgage interest. The "cost" of borrowing remains constant because incomes don't change. As mortgage interest rates decrease, $x doesn't change. Instead people can borrow more (for the same amount spent on interest) and they bid more. So house prices go up.
Okay, on rereading: one problem is that I have never heard of "buying down" because I think the concept doesn't exist in the New Zealand market. The US market for mortgages is extremely different from most countries. I wrote my comments generic enough to cover both (I hoped).
Buying down is not a neutral option: I presume it is making a bet on the future of interest rates. So I'm not sure your logic follows. If we want to make interest rate bets then there's lots of different worms we can eat.
The information gap remains!