Getting real about the coming recession

Getting real about the coming recession
As home values sink and mortgage costs rise, an economy based on housing wealth faces recession. (Image: Getty)
Pattrick Smellie
For some unknown reason, one of the scariest sentences in last week’s financial stability report from the Reserve Bank of New Zealand seemed to attract very little attention.In a box to the side of the official commentary, the central bank observed that if residential mortgage rates were to reach a prevailing rate of 7%, “46% of 2021’s mortgage borrowers would need to spend at least half of their after-tax income on interest payments”.In other words, nearly half the people who borrowed for houses at the top of the market...

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