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Infamous_Sympathy_91 OP t1_ixypsf2 wrote

Reply to comment by Extension_Ad_1347 in Swings and roundabouts by Infamous_Sympathy_91

With QT and rising IR, banks have more pricing power to profit from loans. A UK bank called Natwest, for example, is charging 5.49% on mortgages now, 2.49% above BOE 3%.

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Extension_Ad_1347 t1_ixypye6 wrote

But arent people going to default on their mortgage If the price goes too high?

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Infamous_Sympathy_91 OP t1_ixyrie3 wrote

Delicate balance the BOE is keeping to ensure house price stability for long enough so that if they default the bank can seek to repo their loans with enough equity in housing stock to get paid back fully. However, banks know many people will default as a last resort on their homes, so will dig into savings and cut back.

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