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I think the dynamic in the UK that is much different than the US is the term on the mortgage. In the UK I believe it is a forced renewal every 5 years? In the

I think the dynamic in the UK that is much different than the US is the term on the mortgage. In the UK I believe it is a forced renewal every 5 years? In the US having a 30 year fixed rate mortgage means the price fluctuations are all on paper and unless you are in the market they mostly don't matter at all. Sure if my house went up 50% in the last couple years then on paper that's awesome but I'm not selling anytime soon so it doesn't matter. Now if people are taking out home equity loans to extract that equity and do _something_ then they could be upside down on that house if the value drops.

LatteLazy 4y ago
Correct. You usually fix for 2, 3 or 5 years or not fix at all and just pay BoE rate +X bps. It's technically possible to fix for 10 but few do. I think for the whole "interest rates control inflation" thing to work you need some exposure to it. The Australians have a different model: you fix some of the mortgage and the rest varies with the official rate. It's interesting how different places ended up with quite different models...
Dracophoenix 4y ago
> In the US having a 30 year fixed rate mortgage means the price fluctuations are all on paper and unless you are in the market they mostly don't matter at all. It matters for annual property tax. Rightly or wrongly, persistently low valuations negatively affect local economies in a shorter time frame than 5 years.