A fixed home loan rate of just 2.75 per cent for 10 years at first glance seems unreal to Australian homebuyers. But it’s commonplace in the UK as lenders wrestle for new customers at a time when the Bank of England has kept its official cash rate at 0.5 per cent since early 2009 after the carnage of the financial crisis.
Do extended periods of low interest rates merely fuel a house price surge because just about everyone decides to borrow more, because they can? Competition for properties in inner-city suburbs in Sydney and Melbourne is generally still fierce as debate continues to rage about whether Australia’s major cities are in the grip of a house price bubble. Controversy over the notion of banks being at risk of the “Big Short”shows no sign of abating. READ More: