How Do Interest Rates Impact Real Estate Investing?

Interest rates directly influence the cost of borrowing, which affects everything from property cash flow to investor demand. When rates rise, financing becomes more expensive, potentially reducing returns or property values. When rates fall, affordability increases, and more investors enter the market.

In my experience, savvy investors adjust strategy based on rate cycles — locking in low fixed rates when possible and maintaining flexibility when rates are high. Real estate remains a strong investment vehicle because returns often outpace inflation, even in higher-rate environments. Long-term perspective is the key.