Originally Posted by Captain Mike
But Rich surely this is what is pushing the problem closer to the edge, if people stood up and could simply not afford it the would house prices stop rising ? l am no expert on this but can not see why people expose themselfs to such rish, hell if i could afford to add another 100k on a morgage offer that l have in front of me l would have a dream house, but to me it simply is not an option
each to there own l guess, like i said l know very little about this subject just what i watched and hear
Mike
Yes, in a way, but in a market with relatively stable interest rates, and relatively huge capital appreciation, the risk is minimal to some degree.
Of course, it's when rates rise, people come out of two year fixed interest onlys and the like, and realise that they actually can't afford it! Of course, some people get away with it, as they bank on certain factors that they have a degree of control over such as income, although this is a slightly different issue than the stuff you saw on TV yesterday. Symptomatic of the same lending issues though.
Of course, there's much more of a knock on effect than simply people not being able to make payments, as it's a lot to do with how the loans are packaged as well....