Straight To The Point

I was listening to Radio 4 the other day, to some political gameshow, and managed to catch this bit of Wisdom from Gryff Rhys-Jones (sp?). Basically, his theory is that the rocketting of house prices over the last few years is because of the mortgage have been so willing to lend money, and that is also the very same reason why we now have the "credit crunch".

The thinking goes like this: people will generally pay whatever they can to get their own decent home; if they can get a mortgage for the amount, they will do, and until recently mortgage companies have been more than willing to lend.

So people have been taking out the biggest mortgages they can in order to get a nice house. And so the sellers have been increasing their prices, because people are paying those prices. No-one in their right mind would sell a house for the price it was 5 years ago - that would be like half-price! And so prices have been going up.

Now things are different, and people who took mortgages they could just afford are realising that interest rates go up as well as down.