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if prices have really peaked or are about to peak then I don't think interest rates have to go up. in many markets prices are at the point where you need to get an ARM or an IO loan at current low rates just to be able to make a payment.
I think what's going to happen is just what greenspan wanted to happen. The market will flatten out with maybe a slight deflation in prices and a minimum amount of foreclosures as people are able to refi into decent rates.
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