| We've been here before.We are in a very dangerous place, property wise at the moment.House prices are rising by the day, not month.People are overstretching their finances to get their foot on the property ladder.Interest rates have been at an historically low rate for so long, people have forgotten what it's like paying higher rates.At some point interest rates will rise, people that have overstretched their finances will find they cannot service their debt and will either have to sell their homes, or have them re-possessed. Houses flood onto the market lowering property values, and a lot of people find themselves in negative equity.I think having such low interest rates for so long has actually been a bad thing.For a lot of people, low interest rates are all they've known for the time they have had their mortgage, and they will find themselves in very serious trouble if mortgage rates rise 2-3%.When I took out my first mortgage, I had to take into account that my monthly payments might actually double with rate changes every month.As it turned out, at one point my monthly payment actually trebled.How many mortgage payers today could manage three times what they are paying now ? |