# Question

Since 1980, average mortgage interest rates have fluctuated from a low of under 4% to a high of over 14%. Is there a relationship between the amount of money people borrow and the interest rate that’s offered? Here is a scatterplot of Total Mortgages in the United States (in millions of 2005 dollars) versus Interest Rate at various times over 26 years. The correlation is -0.84.

For these data Kendall’s tau is-0.61. Does that provide proof that if mortgage rates are lowered people will take out more mortgages? Explain what Kendall’s tau says and does not say.

For these data Kendall’s tau is-0.61. Does that provide proof that if mortgage rates are lowered people will take out more mortgages? Explain what Kendall’s tau says and does not say.

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