There are literally hundreds of books and hundreds of seminars "out there" on property investment - all proclaiming the joy and wealth that can come from said venture - what is amazing though, with so much information on a single subject with a multitude of variations on the same, there is very little information on how the humble mortgage works. In fact, mortgage concepts are virtually ignored and yet mortgage and mortgage structure remain the one single and underlying constant that has not changed over time.
Now, from time to time, as fortunes and trends change, mortgage rules do change - but regardless - the fundamental principles of the subject remain remarkably consistent.
While lending practices between 1999 and 2008 changed (for the worse), the mortgage structure and its built-in sensitivity to economic pressure from the real world did not change, and today (late 2008), that pressure has catapulted the Western World and emerging nations into a Global Recession.Who 's to blame? Well, many say the "housing market." Personally, I think not, but the housing market has proceeded the recession by at least a full year.
The job of explaining the complexities of the financial melt-down is the responsibility of an economist - not mine. But what I will say is this: a mortgage does not live in a bubble. A mortgage is exposed to the real world by the interest portion of its structure. Also, too income tax plays a large role is determining eligibility. It is through these two windows the error of lax lending practices will drive home values down and has set the stage for a spectacular fall in asset-value the world over.
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