Looking at things from an Australian perspective, where home mortgages are lent almost entirely on variable rate mortgages which rise and fall with each variation in official interest rates by the Reserve Bank, the USA system of mostly fixed rates seems inefficient economically. Fixed mortgages place banks under great stress during times of changing interest rates which has led to a need for government bailouts of massive proportions in the past, also it insulates consumers from most of the impact of official interest changes, resulting in much larger changes required to alter the course of the economy. Our central bank makes small changes to the interest rates and presto, the economy slows or grows because its impact on mortgage repayments is immediate. The result is an economy of 15 years of consecutive growth which looks like continuing into the future. A move by the USA banking system to true variable loans, not the hybrid fixed loans with occasional changes would be a huge benefit to your economy and its management.
Also I find it hard to believe that any government would give tax deductions on home interest payments, this just encourages the debt spiral and excessive spending and living beyond your means. The removal of those tax deductions would remove most if not all of your govenment deficit and go along way to fixing your trade deficit problems as well as reduce the overheating of your housing market.
Also I find it hard to believe that any government would give tax deductions on home interest payments, this just encourages the debt spiral and excessive spending and living beyond your means. The removal of those tax deductions would remove most if not all of your govenment deficit and go along way to fixing your trade deficit problems as well as reduce the overheating of your housing market.
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