Another trick to keep UK house prices rising is taking center stage: the extra-large mortgage. It’s the mortgage lasting half a lifetime, or more, which allows you to buy a home even if, under normal circumstances, you would not afford it.
The news that Wells Fargo, the US bank that is the world’s biggest lender by market value, targets millennials with its mortgage loans is seen as a sign that we’ve finally gotten over the crisis that nearly brought down the world economy in 2007-2009.
The Financial Times reported that the head of the bank’s home finance business said he was keen to lend more to first-time buyers, who, the paper said, have so far “put off settling down.”
But what is good for America is not necessarily good for the world. While in the US there has been some deleveraging and restructuring that allows the housing market to re-start from a cleaner basis, it is not the case in the rest of the world.
Central banks’ credibility has been eroding bit by bit for a while now, but the first evidence that the public’s expectations about inflation are disconnecting from those of the policymakers emerged on Thursday.
The residential property bubble continues in countries like the UK and Sweden, but it seems to have spread to some other countries as well, according to data from the Bank for International Settlements.
The European Central Bank may have just given the start to a property bubble in the eurozone with the credit easing measures it announced on Thursday. Will it be enough to end the single currency area’s crisis once and for all?
Everyone agrees that housing is a key multiplier to a nation’s economic growth agenda, given its linkages with numerous ancillary industries. Affordable housing is crucial for a robust property market.
But the experience of countries, especially developing ones like India, shows housing development so far has largely targeted high/mid-income population.