The Era of Very Low Inflation and Interest Rates May Be Near an End

Re:The Era of Very Low Inflation and Interest Rates May Be N... by encoderer on Thursday April 26, 2018 @04:33PM (#16935447)

These are not fixed rate loans?

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Re:The Era of Very Low Inflation and Interest Rates May Be N... by winthrowe on Thursday April 26, 2018 @04:38PM (#16935512)

You can't really get a rate fixed over the entire amortization period in Canada, our 'fixed rate' mortgages are a 5 year lockin typically.

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Re:The Era of Very Low Inflation and Interest Rates May Be N... by kylemuir on Thursday April 26, 2018 @04:39PM (#16935523)

When those fixed rates end and they have to refix a ton of overleveraged people will force mortgagee sales.

In Auckland there's been talk of that for at least 5-6 years. For example, people I personally know only earn $80-90k/yr and yet own a $500k house (absolute entry level livable house in Auckland). They also got in under our old rules which meant they only needed 5% deposit instead of the 20% required now.

They're only being propped up by their record low interest rates. If those interest rates went up 2-3% they'd be in serious trouble.

EDIT: for more context the average fixed period for any home loan in NZ is roughly 2-3 yrs. The term is a 30 year term typically.

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Re:The Era of Very Low Inflation and Interest Rates May Be N... by encoderer on Friday April 27, 2018 @05:05PM (#16944318)

In USA it’s common for loans to be fixed rate for life of loan.

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