I believe that in the US you can lock in a 30 year home loan. If that is the case and the current buyers are locked in at low rates does not that have a upwards effect on new rates when they start moving as the need to charge a larger rate spread to cover the interest they are earning below cuurent market.
It probably should, but i’m sure if the banks there are willing to allow you to lock in your interest rate for 30 years, they’ve figured out the consequences of it. I don’t think it’ll affect the rates the banks charge
thats why there is a futures market on interest rates and more analysts than you can poke a stick at forecasting rates going forward.
financiers purchase their finance on this basis and you will pay for the priviledge. the financier hedges their books into the future as well. aust financiers do not offer long term fixed rate to cover their butts. financier competition has pushed the US market to accept more risk by offering longer terms.
jm
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