“That’s because borrowers today have much larger mortgages relative to their incomes,” as Hudson puts it. “So, they are much more sensitive to rising mortgage rates than previous generations.
But, instead of calling this a crash, we should regard it as a realignment. A repricing of homes relative to what people can afford without cheap credit. My home is going to be worth less than I paid for it for some time and my mortgage will likely keep getting more expensive. My story is not unique, it will be just one of many.
Or, if he wanted to be really, really sensible, he could do that and invest in housing as national infrastructure, and build social homes which would both bring returns over a long period of time via rent, and boost the economy.As house prices have risen, so has the length of time it takes to repay the ever-larger mortgages that people have taken out to buy them. : nearly 830,000 mortgage holders could be paying their loans into retirement.
In this report, I speak to people who are taking out 34, 35 and, even 40-year mortgages which they will be repaying into their 70s and 80s. Well, on Friday they are set to announce a rate increase for that mortgage. The rate has not been disclosed but, when the product was launched, it was priced at 5.49 per cent for a five-year fixed rate. So, it will be higher than that.
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