>Agreed. 20 years of lower and lower interest rates, meaning higher and higher mortgage amounts have driven up prices into oblivion.
The falling of interest is purely market driven. There is no government intervention there. Interest rates have been falling for a long time, far longer than 20 years and the reason is pretty simple. There are people out there who do not spend their money. The interest rate simply moderates between saving and investment. If saving is going up relative to investment then the interest rate must drop.
You say higher and higher mortgage amounts have driven up prices but if you spend $360k what is wrong with getting a $360k house out of it in the end? What's so good about paying interest?
> The interest rate simply moderates between saving and investment.
For businesses perhaps, but this doesn't happen much at the personal level. Most people will save in cash, rather than invest, even if interest rates are zero or negative. Most people are risk adverse.
> While the annual ISA tally showed high levels of saving, most of the money went into cash ISAs, which offer low rates of interest and could leave savers vulnerable to rising inflation.
> Some 300,000 new subscriptions went to stocks and shares ISAs, compared with 1.2M new subscriptions for cash accounts.
So that's only ~20% of savers investing in to stocks in the most tax efficient way possible in the UK, even when the Bank of England base rate is at 0.1%
The falling of interest is purely market driven. There is no government intervention there. Interest rates have been falling for a long time, far longer than 20 years and the reason is pretty simple. There are people out there who do not spend their money. The interest rate simply moderates between saving and investment. If saving is going up relative to investment then the interest rate must drop.
https://news.ycombinator.com/item?id=28373304
You say higher and higher mortgage amounts have driven up prices but if you spend $360k what is wrong with getting a $360k house out of it in the end? What's so good about paying interest?