Wednesday, August 3, 2016
Enhanced affordability will increase prices
Forget all the other issues, when rates fall, as I've said for a long time is just as likely as the now forgotten rise, banks will start to factor that in, increasing the amount that borrowers can afford when borrowing to buy a house or carry out mortgage equity release. This money will be used to bid up house prices. If house prices rise faster than construction costs, more homes will be built, but with a migration surge front-running border controls, they simply cannot build enough. Prices are about to go through the roof. Wider issue is, if rates fall, is this, following years of plateaux, the beginning of a downward trend towards negative? With oil prices back below the $40 handle this week deflation may be a wider trend due to technology & movement of labour via migration & IT.