| snyps said: Variable rate mortgages are what made everyone loose their homes. The market goes up, they raise yoyr rate, your sol. Most ppl could have afforded their homes if they were smart enough to sign fixed rates. So know europe didnt get it right in this legislation. They just want you to think its all gonna be better |
There is nothing inherently wrong with variable rate loans though, interest rates can rise or fall, if you are smart enough to be able to read the state of the economy (inflation figures, jobless rates) then you can easily predict the direction the rates will go and act accordingly. Anyway if you can't afford a 2% increase then you can't afford the loan, the problem arises when people get swept up in building/buying their dream home and borrow to their absolute limit to get there so that if rates do go up they are stuffed.
Personally, though I believe bank regulation can be good (it blew my mind when I read about the ninja loans in the us) a lot of the responsibility should still rest with the person actually borrowing the money, if you aren't savvy enough to work out what you can and can't afford then you should get yourself educated, the info is out there. In a capitalist world, teaching the basics of finance is as important as grammar IMO.
