Mortgages are death grips, or more accurately debt grips, that crush and suffocate borrowers.
Debtors are required to pay a sizable cash down payment in order to get a mortgage. Following that, the banker enters a few numbers on their computer screen to generate credit out of thin air. The debtor is required to repay the phony money with actual cash as well as more actual cash in the form of usurious interest.
Since everyone is, of course, doing the same thing, there simply isn't enough real money to pay off all the fake money, which is why homelessness and bankruptcy are on the rise, and everyone else is forced into competition and workaholism in an effort to maintain their position at the top of the rat pile.
The markets fall and millions lose not just their homes but frequently also the principle they paid and the down payment since there are too many borrowers who can't repay all that false credit with real money at once.
Mortgages are death grips, or more accurately debt grips, that crush and suffocate borrowers for an average of 25 to 40 years.
One significant aspect that allowed many homeowners to save money is now affecting those looking to buy a house. The interest rate trap, if you will.
Millions of homeowners have been able to refinance into mortgages with rates between 2% and 4%, cutting their monthly payments by hundreds of dollars, thanks to years of historically low rates, particularly in the last two years.
These same homeowners are delaying an upgrade since mortgage rates are now approaching 5%, contributing to the inventory shortfall that is causing a buyer affordability dilemma.
By the end of this decade, more than a quarter of a million homeowners with interest-only mortgages might retire with the balance still owing.
Throughout the 1980s and 1990s, interest-only mortgages were highly common, and they were frequently set up with endowments or ISAs (Individual Savings Accounts) as the repayment vehicles. Many of these investment plans, meanwhile, were abandoned and not replaced, leaving the borrower without a clear plan for paying back their mortgage.
Several lenders made pure interest-only mortgage loans in the years preceding the credit crunch of 2007 and 2008, when no explicit repayment plan was in place.
Between now and the beginning of the next decade, 150,000 Interest Only mortgages are scheduled to expire, making it appear that the issue of how to repay these debts will persist.
Tens of thousands, if not hundreds of thousands, of individuals are approaching retirement age and are being expected to pay for a mortgage that may not have been fully covered by an endowment investment or even capital growth. This is a terrible scenario that is unfolding.
