Quote:
Originally Posted by Fuzz
Haven't most high risk mortgages in the past several years had to pass the stress test of about 5%? I imagine rates won't really get higher than 5 or 6%, so in theory, buyers should be capable of handling it.
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Why do you think rates will only go that high? Because in most people's lifetime they haven't seen it higher...
US 30 year rates passed 5% yesterday. They were 3% in Dec.
If inflation doesnt slow down what other tool do you think the Fed has?
They will have to choose between crashing housing or destroying the low and fixed income earners with inflation
And even if people can afford it to a certain extent, this increase in 'costs' takes disposable $$ out of the economy and directs it at their mortgage, and we plunge into a recession, requiring interest rates to drop and inflation to kick back up
