Low interest rates means house prices are high now, and they will fall when interest rates climb, giving you capital losses. Much better to buy when interest rates are high, as rates will fall in the future and house prices will increase, giving you capital gains.
In both cases, you will pay the same amount for the same house in terms of monthly payments, as households are payment constrained, and they don't particularly care what percentage of their monthly payment goes to pay for principle and what percentage pays for interest. They max out what they can afford in terms of the total monthly payment, and thus houses prices go up and down in the opposite direction of interest rates.
But be careful, even though it is much better to buy when rates are high, that doesn't mean that waiting for rates to go up is a good strategy, as rates may not go up for twenty years, or even a hundred years - you don't know. But certainly a low interest rate environment is a terrible time to buy a house, even if you have to suck it up and buy anyway.
But when will rates be high? Rates have been consistently falling since 1981...for the last 40 years! They have been under 5% for the last 10 years. No sign of any upward pressure at all.
I would answer that question by asking how much lower do you think rates will go? And how long do you think the current IR will last? Rates were rising from about 1951 (when the Fed first gained independence) to about 1980. The've been falling from the mid 80s until the present. Whatever happens, everything comes to an end, and the current regime is a bit long in the tooth already.
Bottom line, rates will change when there is a financial regime change due to the current system no longer working. I think it's obvious that what we are doing now is unsustainable: running massive deficits, enormous capital account inflows, and dollar appreciation. In terms of what would be the breaking point, one can only speculate as to whether it is too much inflation, or too many defaults, etc. At some point, the snowballing side effects of our current policies will just stop working, at which point a new regime will be needed. I don't know when.
For a big picture view, I recommend Sydney Homer's A History of Interest Rates. It's a great read and discusses long term interest rate regimes as well as various triggers that changed them.
In terms of trying to time these regime changes, I wouldn't bother. What you can do is hedge a bit so that you are not financially ruined in case there is a regime change. I would not use the low IR regime we have now to massively go into long term variable rate debt, for example, or massively go into long term fixed rate debt if you can't handle a rate increase. So just be aware that rates will go up at some point, and make sure you can handle that before taking on a lot of leverage.
Low interest rates means house prices are high now, and they will fall when interest rates climb, giving you capital losses. Much better to buy when interest rates are high, as rates will fall in the future and house prices will increase, giving you capital gains.
In both cases, you will pay the same amount for the same house in terms of monthly payments, as households are payment constrained, and they don't particularly care what percentage of their monthly payment goes to pay for principle and what percentage pays for interest. They max out what they can afford in terms of the total monthly payment, and thus houses prices go up and down in the opposite direction of interest rates.
But be careful, even though it is much better to buy when rates are high, that doesn't mean that waiting for rates to go up is a good strategy, as rates may not go up for twenty years, or even a hundred years - you don't know. But certainly a low interest rate environment is a terrible time to buy a house, even if you have to suck it up and buy anyway.