I agree that mortgage rates didn’t drop to that level, but the same sort of trick worked on them. House prices were rising at anything up to 10% per annum, well above the mortgage rate, so you could refinance regularly, probably reduce your Loan to Value level, and also free up more capital to pay off the upcomming interest payments.
As you say, these methods have pretty much stopped working as the growth and interest figures have flipped. I don’t see much of a risk of a true market collapse though as there are simply too many powerful people and institutions with too much to lose if that happened. It could be rather turbulent for the rest of us though.
I agree that mortgage rates didn’t drop to that level, but the same sort of trick worked on them. House prices were rising at anything up to 10% per annum, well above the mortgage rate, so you could refinance regularly, probably reduce your Loan to Value level, and also free up more capital to pay off the upcomming interest payments.
As you say, these methods have pretty much stopped working as the growth and interest figures have flipped. I don’t see much of a risk of a true market collapse though as there are simply too many powerful people and institutions with too much to lose if that happened. It could be rather turbulent for the rest of us though.