Gerstner illustrates demand destruction: $1,200 monthly payment bought $350K house in December, now only $295K.
“Just the increase in the thirty year mortgage means you're buying power in December, four months ago, to buy a house and you if you could afford $1,200 a month, that buying power bought you a $350,000 house. Today, it buys you a $295,000 house.”
Gerstner illustrates demand destruction: $1,200 monthly mortgage payment bought $350K house in December, only $295K today.
“Today, it buys you a $295,000 house. People's ability, right, to have money, to spend money is getting crushed,”
Gerstner highlights the shift from zero rates to 8% mortgages as evidence of dramatic policy change.
“We've gone from effectively a 0% interest rate environment in ZERP, where corporations borrowed for free and consumers borrowed for free, to now we have 8% mortgages.”