Money Talks: House arrest
Money Talks from The Economist
The Economist
4.4 • 1.2K Ratings
🗓️ 22 June 2022
⏱️ 42 minutes
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Summary
House prices across the rich world have dramatically increased since 2020. But that rapid rise could soon be coming to a sputtering halt, as central banks raise interest rates in an effort to rein in prices. Is another housing crash on the way?
This week, hosts Alice Fulwood, Mike Bird and Soumaya Keynes investigate the potential fallout of rapidly rising mortgage rates. First, they speak with Dallas Federal Reserve senior research economist Enrique Martinez-Garcia, who argues that America is currently in a housing bubble. Then, our senior producer JohnJo Devlin takes a tour of one of the most exposed property markets in the world: Norway’s. Finally, our global property correspondent Vinjeru Mkandawire explains which other countries’ housing markets are most vulnerable to rising rates – and offers her opinion of the best place in the world to buy a house.
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Transcript
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| 0:00.0 | It's every man for himself. Only those who are ruthless will succeed. Only the |
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| 1:09.1 | changes. Welcome home. So recently I discovered something particularly |
| 1:17.4 | unwelcome. Marie Kiworth is a 35-year-old who lives in South London with her husband and |
| 1:24.1 | two kids. She's also our show's producer. A two-year fixed rate mortgage was running out. |
| 1:30.9 | One thing to note here, if you're an American, is that mortgages in the UK work differently |
| 1:35.3 | than they do in the U.S. Where 30-year fixed rate mortgages are much more common. You'll |
| 1:40.5 | get a mortgage, but the interest rate will only be fixed for a short period, normally |
| 1:44.9 | 2-3 or 5 years. So we've just applied for a new mortgage, and because rates have started |
| 1:49.9 | to rise, and it's still unclear to me at least how far they'll have to go to tame inflation, |
| 1:54.9 | we thought we should protect ourselves from that by going for a 5-year fixed rate. Seems |
| 1:59.1 | logical. So we've locked in how much we'll be paying for the next 5 years, which is |
| 2:03.1 | £200 more per month to live in the same house. We were both pretty horrified. And I thought |
| 2:11.0 | I was personally responsible because I've recently left my job to become self-employed, |
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