Re:Inflation rises to 7% in December (led by energy)
by jdsully on Wednesday January 12, 2022 @06:33PM
(#29914353)
They are stress tested to up to 5.5% interest, so it will take huge moves to cause insolvency. This isn't like the US subprime issue, these borrowers can afford the higher rates.
Re:Inflation rises to 7% in December (led by energy)
by refurb on Wednesday January 12, 2022 @07:30PM
(#29915079)
Right, but don’t ignore the knock on effects of housing payments sucking up more cash, reducing consumer spending. And it won’t be fun refinancing at a higher rate and finding out your house is worth less than when you bought it.
Re:Inflation rises to 7% in December (led by energy)
by rapind on Thursday January 13, 2022 @07:35PM
(#29929057)
I don’t think our government will let interest rates go up. It should have happened a decade ago, but they kept lowering them instead (and watched the bubble grow). It’s political suicide at this point to do it in any meaningful amount.
Re:Inflation rises to 7% in December (led by energy)
by rapind on Thursday January 13, 2022 @07:41PM
(#29929103)
> these borrowers can afford the higher rates.
Not at all what I’ve been reading. We have a record high 2.5 trillion in mortgage debt, and a lot of that debt (especially in the last year) is high risk.
Re:Inflation rises to 7% in December (led by energy)
by jdsully on Thursday January 13, 2022 @07:54PM
(#29929192)
Both banks and credit unions are required to perform the stress test. The biggest source of fraud is likely loans from parents marked as gifts, but it doesn't change the borrowers have to show evidence they can handle 5% interest rates on the mortgage portion.
The root issue as far as I can tell is supply is incredibly poorly managed. When I was living in Vancouver, there was a lot next to us that was waiting for permission for 2 years to build a low rise, mixed use building in an area already zoned for it. Don’t get me started on “historic” homes in dense areas.