Home Affordability and The Convexity of Housing

Home Affordability and The Convexity of Housing

We have determined that there is a direct relationship of the amount of mortgage that is supported by a static cash flow as mortgage rates continue to change. In this whitepaper, we explore the trade-off between asset inflation and monthly debt servicing. We illustrate that there are diminishing marginal benefits with respect to home affordability from interest rate cuts and other forms of monetary easing.