But does flipping it really extinguish the loan if the purchaser took out a loan to buy it? If the purchaser was able to get a larger loan based on the lower rates, then the low rate helped create the sale (i.e. the house was now worth more than the original owner payed for it, because someone with an equal income can now get a larger mortgage). Now the original owner has more money, and he goes out and gets a larger mortage too, buying a more-expensive home, whose owner, etc. etc.But even if money is exogenous and monetary policy works, it's presumably even less relevant to asset bubbles, because the interest rate of a loan only matters if you plan on holding it. If the plan is to buy a house and flip it, thus extinguishing the loan quickly, then the rate of the loan doesn't matter.