Question

Mortgage interest rates and home prices
30-year mortgage rates
year	interest rate (%)	Median home price
1988	10.30	183,800
1989	10.30	183,200
1990	10.10	176,900
1991	9.30	173,500
1992	8.40	172,900
1993	7.30	173,200
1994	8.40	173,200
1995	7.90	169,700
1996	7.60	174,500
1997	7.60	177,900
1998	6.90	188,100
1999	7.40	203,200
2000	8.10	230,200
2001	7.00	258,200
2002	6.50	309,800
2003	5.50	329,800

1.    Generate two separate scatter plots, following the requirements below, with the data provide.
a.    year and interest rate
b.    year and median home price
2. Use your graphs and calculations to answer the questions on blackboard. If you are lost, please review the excel word document. Assessment: Now that you have reviewed how to create a graph in excel. Open the attached excel document and generate the required graphs. You will utilize the graphs to answer the post lab questions below. Provide all your answer with two decimal places. 1. For the year and interest rate graph, what is the slope and the y intercept? 2. For the year and median home price, what is the slope and the y intercept? 3. Does the linear equation provided from the Year vs. Median Home graph, provide a highly recommended estimate for future home values? Explain your answer. 4. What is the expected median home price in 2019, based on the data from 1996 to 2003? 5. In what year will the interest rate reach 3.50%? (Round to the nearest year.)

Answer 1

1. a.

The scatter plot for year and interest rate is given below:

b.

1. For the year and interest rate graph, what is the slope and the y intercept?

The slope is -0.2618 and the intercept is 530.39.

2. For the year and median home price, what is the slope and the y intercept?

The slope is 8155.7 and the intercept is -1.6E+07.

3. Does the linear equation provided from the Year vs. Median Home graph, provide a highly recommend

No, the coefficient of determination is 0.5801.

4. What is the expected median home price in 2019, based on the data from 1996 to 2003?

The median home price =-1.6E+07+8155.7x

=-1.6E+07+8155.7*2019=396541.029

5. In what year will the interest rate reach 3.50%?

Irate=530.389-0'2618*year.

3.5=530.389-0.2618*year

3.5-530.389=-0.2618*year

year=(530.389-3.5)/0.2618=526.889/0.2618=2012.56~2013.

Therefore in the year 2013, the interest rate will be 3.5%.