In the US they are beginning to worry about the possibility of being faced with a Bubble-
A variable rate refers to an interest rate that is not fixed and that changes(…)-” href=”https://www.euribor.com.es/glosario/tipo-variable/” data-gt-translate-attributes=”[{“attribute”:”data-cmtooltip”, “format”:”html”}]”>variable rate in Spain), one of the financial products blamed for the real estate crisis of 2006.
The resurgence of interest in adjustable-rate mortgages (ARMs) may raise questions about whether the housing market is repeating some of the trends of 2006, when home prices soared as buyers snapped up properties. and banks scrambled to make loans. However, financial analysts point out that there are some differences between the current housing boom and that of 2006, such as stricter lending standards by banks.
Mortgage granting rules are more cautious today than during the 2006 housing bubble. In the real estate race more than a decade ago, some banks made so-called “liar loans,” or mortgages that required little or no documentation of income. . Today, banks require buyers to verify their income in order to qualify for a loan.
Variable rate mortgages, which in the US have always been a minority in the market, had a bad reputation during the housing bubble because they were offered to some buyers who were not eligible for a conventional mortgage. As the initial interest rate was lower, the lenders were more willing to grant the loans. This became a big problem when the housing market crashed and interest rates-
Today, banks make sure that borrowers can afford variable-rate mortgages, including the possibility that their income can absorb a higher rate once the initial period expires. Although the percentage of variable-rate mortgages is increasing, it is still well below what it was in the mid-2000s housing boom, when more than half of new mortgages were variable-rate loans.
We hope that a crisis like the one in 2006 will not be repeated again, but for now the ingredients we are cooking are very similar: skyrocketing housing prices and rising interest rates. Will this time be different?
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