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From that it seems to assume a four times salary purchase that is largely borrowed. The calculation is based on current borrowing cost and looking at historical
by josephlord 13y ago
From that it seems to assume a four times salary purchase that is largely borrowed. The calculation is based on current borrowing cost and looking at historical interest rates a doubling of the current rate seems plausible in 5 to 10 years potentially putting those buying these currently affordable houses into trouble.
- Domenic_S 13y agoWhich is why you get a fixed-rate loan...
- josephlord 13y agoCan you get a multi-decade fixed rate mortgage in the US? I don't think that they are obtainable in the UK, most fixes only cover the first couple of years. Is it a two way commitment so that you are locked in for that time period and it makes it harder to move/downsize or can you pay it off early?
- Domenic_S 13y agoYes you can. The product most people get these days is the 30-year fixed rate. 15- and 10- year are also available; as you shorten the term, the APR decreases. They typically don't have any pre-payment penalty.
- runamok 13y agoI wonder about that too. The thing that seems to remain constant is your monthly payment which is of course influenced by the interest rate. So presumably a high interest rate would make a lot of home prices go down.