UK Economics

UK Economics Focus
17 May, 2007

Have fixed rate mortgages changed the housing market?

The popularity of fixed rate mortgages in recent years appears to have dampened the sensitivity of the housing market to rising interest rates. That is not to say that higher interest rates will not have an impact. Rather, it means that the adjustment may be more drawn out than in the past. Indeed, we may not see the full impact of recent interest rate increases until the second half of 2008. It also raises the possibility that interest rates end up going higher than is widely assumed at present....

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