What is it about?
This paper draws attention to the high costs of borrowing, which consume much of the growth in house value (so called ‘profit’ made by homeowners). In fact, when buying with a mortgage, people pay twice or three times the purchase value of their home.
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Why is it important?
This is important because it is in the advantage of people to save more and borrow less with far-ranging consequences, including more stable, less speculative housing markets.
Perspectives
I was quite shocked to see how everything concurs so that British people can forget their debt: banks talk about ‘mortgage interest rates’ not ‘mortgage interest costs’; media reports house price growth unadjusted for inflation; and peoples equate gross capital gains’ with the profit of buying!
Dr Adriana Mihaela Soaita
Read the Original
This page is a summary of: Homebuying: a Critical Perspective on Financial Costs and Gains, Critical Housing Analysis, January 2015, Institute of Sociology of the Academy of Sciences of the Czech Republic,
DOI: 10.13060/23362839.2015.2.1.177.
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