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

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.

180t.. 160 120 10 12 14 Interest Rate (%)

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