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Thought experiment: secured loans are forbidden by law

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So help me figure this out. If secured loans were forbidden by law, such that mortgages had to be at the same rates as unsecured loans, what would happen? 

House prices would crash, but then what? Would it lead to economic armageddon? Would rent plummet and families be able to afford to buy their own houses? Would people stop wanting to buy? Would the wealthy buy up all the housing and corner the market? 

The ultimate question is what would the eventual equilibrium potentially look like once the dust settled?

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  • 149 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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