Sunday, May 11, 2014
This is deflationary. Will cause rates to fall.
Borrowers left in chaos by mortgage crackdown : Lenders grappling with new affordability rules are preventing sales from going through
MMR will achieve the opposite of what it aims to achieve, like most government intervention. By forcing lenders to consider interest rate rises, less lending will occur, putting downward pressure on prices (deflationary forces) causing interest rates to plunge for those who qualify for loans. However, this could be great for businesses, because less lending on mortgages means more cash available for business lending. Could help to buy have been a tool to cushion the blow of implementing these Basel requirements? Also, note, having children will vastly reduce your ability to borrow. Thus, the housing "crisis" was engineered on purpose to allow government to control who can borrow what and live where. They had to create a crisis to justify this totalitarian control over mortgages.