Readers discussed the rising interest rates as a topic. "A possible topic; the effect of suddenly higher interst rate." "I did the calculations and basically one point (6% to 7%) on a 30 year fixed with 20% down adds $25k to the effective cost of a $250k home. More expensive homes see a greater cost increase, less expensive homes less. For those with a large downpayment (e.g. 50%) and using a 15-year fixed, the increase in buying cost is minimal."

"Assuming that most folks have little downpayment and max out on the home they can buy, higher interest rates significantly reduce my competition. Time to low ball!"

One replied, "There is another way to look at this illustration. Suppose a budget-constrained household could have 'afforded' a $250K home before the rate increase. Now they can only afford a $227K home, roughly a 10% haircut in their maximum purchase budget ($250K X 250/275 = $227K). If everyone in the market simultaneously faced the same tightening of their purchase budgets, then I guess that would translate into a prospective 10% drop in market values?"

Another wrote, "It should translate into less purchasing power, and a drop in prices, right? Unfortunately, people haven’t been purchasing based upon what they can afford, but rather on what they want. This disease hasn’t yet been eradicated."

One was more specific, "The severity of the rate hikes will dictate the impact...1/2 % will hurt but not cause a meltdown. If we get into the mid 7’s its fasten your seatbelt time particularly if jobless rate climbs into the 6’s."

"Valuations over the past few years have been established with historically low interest rates and gimmicks...Mid 7’s will wipe out those spiked valuations bringing chaos to the markets, IMO. I hope it does not happen. It will not be fun no matter what position you are in."

Another expanded the subject, "The higher the interest rate rises with falling house prices, even if rents stay stable, the easier it will be for me to pay my rent and add to my savings. But what’s going to happen to those who need to cover housing costs by selling over priced illiquid assests (art, old cars, jewelry, baseball cards, sports memob’ etc)? Should make for interesting times ahead."

One reader has a target. "Death by a thousand cuts or 1/4% FED rate increases is soooooooo streching the bungi cord…let this whole load fall on the weight of 'over-their-head-in-debt' + 'my-house-is-not-worth-what-I-paid-for-it-so-I-can’t-get-a-home-ATM-loan-anymore.'"

"I say: Please… some how… someway… make interest rates go to 15%… then we’ll all really know what a…1,000,000 million dollar house is worth. The rest of home prices can fall, where they fall."

To which was said, "Make interest rates go to 15%? No es necessito. A clear indication that rates are marching up and home prices are falling in conjunction with restoration of underwriting standards (income verification, demonstrated ability to save money, etc.) and downpayment requirements would easily lop off 50% from current bubble market prices before rates reached 10%."

The Hartford Courant. "A spike in residential mortgage rates is sending shock waves through a housing market that is already struggling both locally and nationwide, causing some buyers to drop out of deals and dashing hopes that the market is on the verge of recovery."

"Mortgage broker Michael Menatian, of Sanborn Mortgage in West Hartford said he has already had one buyer back out of the market this week and is waiting to hear decisions from two others who are scrambling to see whether they can cover the costs of the higher mortgage rates. Other clients are switching from long-term, fixed-rate products to more risky adjustable-rate loans."

"'It’s only been a few days, and already we are seeing the effect of the higher rates,' Menatian said. 'Buyers that are in the market, but unsure or on the edge of what they can afford - they’ve walked to the sidelines. This is going to hurt.'"

"Beth Hough and her husband have had their Trumbull house on the market for slightly more than $400,000. They had hoped to purchase a larger home in nearby Monroe, priced between $500,000 and $550,000."

"But the rapid rise in rates has dashed their hopes. The difference in the mortgage payment between rates of 5.99 percent and 6.75 percent rate on a $400,000 loan is an extra $210 a month."

"'It brought us over the edge in what we can afford. Two hundred dollars a month is a big difference,' Hough said, especially when offers for her house have been lower than anticipated. 'Two months ago, we were OK. But now things have changed, and we are in a position where we have to pull out.'"