Bottom of the range: Difference between revisions

But it is one thing looking at this from the prism of fiscal policy. Looking at it from a home-owner’s perspective tells a different story. You put on your borrowing mindful of the cost of doing so: the potential range of future interest costs. You borrowing is fixed for a short term, but your investment is illiquid — no-one moves home for the hell of it — so you have risk to interest rate movements. Now if you have borrowed at 8%, even a whole-point rise is generally tolerable: that’s an eleven percent increase in your cost of funding, but most people will be able to cancel Netflix, do without that Starbucks and so on to manage that.  But if your borrowing rate is 0.75% — as many are today — a rate rise of 1% is a 158% increase in your cost of funding. Doubling, and half again, your mortgage payments, ''just to service interest''.

*[[Outside trading]]

*[[Second loss]]