EASY

Does the UK’s preference for short-term home loans (and everything else) put us at greater risk of a recession than other major economies?

It’s correct.

Interest rates are now at their highest level since 2009 and only getting higher.

Mike Harris of Cribstone Strategic Macro is an analyst who thinks the UK is in trouble faster than the rest.

In Europe and America home loans are long-term, at least 10 years, sometimes 20 years, and in the US, not 30 years.

Over the life of a mortgage, those born may or may not pay more, but they certainly know that if they can afford the first mortgage, then they will be able to final payment.

Here we prefer 2, 3 and 5 year fixed interest rates.

The rationale – one reason given by bankers and mortgage brokers selling products and taking commissions – is that it’s impossible to know what rates will be in the future, so why? bind yourself?

Isn’t the agility to renegotiate every few years much better? (For brokers, that certainly is.)

The implication of short-term deals is that more people in the UK than anywhere else are about to get new loan deals, perhaps much more expensive than they are currently paying.

Some simply won’t be able to cope.

“We have a whole generation of mortgage holders who rarely see interest rates rise,” said former Bank of England chief economist Andy Haldane on Monday. It will be a huge shock to the system.”

Britain has always favored short-term gains, valuing the pound won today more than two pounds saved tomorrow. A country without so many shopkeepers, gamblers.

We are about to lose our most recent bet.

LEAVE A REPLY

Please enter your comment!
Please enter your name here