3 ms·
> You will "pay" the same for your house (total payments) regardless of interest rates. There is a missing branch in your procedure... step 4b) Banker refuses
by tomxor 8y ago
> You will "pay" the same for your house (total payments) regardless of interest rates.
There is a missing branch in your procedure... step 4b) Banker refuses loan because combination of interest rates and house prices are too high for person to afford with current income:
> In 1991, 67% of British 25- to 34-year-olds owned property; today only 37% do.
I suspect this varying cut-off threshold of a substantial portion of the population is largely responsible in the apparent non-simplistic relationship between the other variables.
- laurencerowe 8y agoI think that change is better explained by the higher deposits required under the present high asset price low interest rate regime. The UK base rate was around 12% in 1991 and it is 0.5% today. If you assume an equal mortgage payment you now need a deposit 4 or 5 times as large to get on the housing ladder.